Ag Growth sets up investment fund in Brazil

Executive Summary

• Ag Growth International Inc. (AGI) has established a new investment fund structure to finance qualified local commercial customers for large-scale grain-storage and grain-handling projects supplied by AGI Brazil.
• The fund targets the monetization of eligible long-term receivables from these commercial projects, distinct from a previously announced fund for farm-segment customers.
• The initial tranche has a target capacity of up to approximately 1.2 billion Brazilian real (roughly $300 million CAD), with potential for future expansion.

Key Details

• Structure: The financing arrangement is set up as an investment fund, a common structure in Brazil, designed to monetize eligible long-term receivables arising from AGI Brazil's commercial projects.
• Target Capacity: The first tranche of the fund has a target capacity of up to approximately 1.2 billion real, equivalent to roughly $300-million (Canadian).
• Expansion Potential: There is room for further expansion of the total size of the fund in the future as conditions warrant.
• Distinction from Previous Initiatives: This fund is new and separate from a fund initiative previously announced in early 2024, which targeted farm-segment customers in Brazil.
• Immediate Monetization: AGI anticipates monetizing approximately CAD $100-million in long-term receivables for projects financed up to this point over the next few months, subject to completing required administrative and regulatory steps.
• Remaining Capacity: Approximately $200-million of remaining capacity exists in this new commercial-focused investment fund.
• Strategic Impact: The structure aims to streamline the financing process for future projects, optimize AGI's working capital position, and provide a competitive advantage in the Brazilian market by facilitating the build-out of grain storage and handling infrastructure.

Notable Quotes

• "Our strategic focus on developing the international commercial market continues to be a key priority for AGI, with activity in Brazil leading the way... The fund structure enables AGI to participate in a wider variety of projects and creates an additional competitive advantage for us within the Brazilian market." — Paul Householder, CEO and President
• "With the new fund structure now set up, we will begin transferring long-term receivables for projects AGI Brazil has financed up to this point... This differentiated capability provides value to our customers and enables AGI to more effectively support and deliver large scale projects all across Brazil." — Jim Rudyk, CFO