Ag Growth completes $90-million debt and equity financing to pay for Westeel

WINNIPEG – Ag Growth International Inc. (TSX:AFN) has completed a $90 million round of financing that will help the Winnipeg-based agricultural equipment company pay for its acquisition of Vicwest’s Westeel division.

Ag Growth raised about half the money from the sale of 967,000 subscription receipts, for $46.55 each, and the other half through unsecured debt that can be converted to equity.

It announced on Nov. 11 that it would pay $210 million cash to buy Westeel to expand its grain storage business in a deal that’s expected to close by April 30, 2015, subject to approvals.

The subscription receipts will be exchangable for Ag Growth common shares plus any dividends owing once the Vicwest transaction closes, unless it doesn’t close by April 30. Otherwise, the money will be returned plus a pro rata share of interest earned on the proceeds and the receipts will be cancelled.

The debentures have a 5.25 per cent annual interest rate and are convertible at the option of the holder at a rate of $65.57 per share. If the deal closes by April 30, the debentures will mature Dec. 31, 2019 or, if the deal doesn’t close, they’ll mature April 30, 2015.

Ag Growth shares are trading near their 52-week high of $51.79. They were at $50.27 Monday morning, up 20 cents from Friday’s close and up from $47.99 on Nov. 10 before the Westeel deal was announced as part of a transaction that also included Vicwest and Kingspan Group PLC.

Kingspan is aiming to buy all of Vicwest’s shares for $12.70 per share, valuing Vicwest at $350 million on an enterprise value. Ag Growth will then acquire substantially all of Vicwest’s Westeel assets, including cash, working capital and a facility in Regina that’s currently for sale, giving Westeel an enterprise value of about $221.5 million.