BUSINESS: AGI Reveals 2021 Outlook And Announces $100 Million Convertible Subordinated Debentures. Redemption Of Outstanding Debentures Due June 2022.

dWeb.News Article from Daniel Webster dWeb.News

dWeb.News Article from Daniel Webster dWeb.News

Daniel Webster, dWeb.News Publisher

October 14, 2021 15: 34 ET | Source: Ag Growth International Inc.

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

WINNIPEG, Manitoba, Oct. 14, 2021 (GLOBE NEWSWIRE) — Ag Growth International Inc. (TSX: AFN) (“AGI”, the “Company”, “we” or “our”) announced today an operational and financing update.

AGI Reaffirms 2021 Outlook
AGI reaffirms its previously disclosed outlook for near-term financial results, which includes expectations for:

Q3 2021 sales to increase relative to Q3 2020 but, as expected, higher steel prices and supply chain challenges are anticipated to result in lower adjusted EBITDA1 on a year-over-year basis
Strong sales as well as adjusted EBITDA growth in Q4 2021
Very robust backlogs across AGI which were up 99% year-over-year as of September 30, 2021
Despite the anticipated steel impact in Q3 2021, full year 2021 adjusted EBITDA is expected to be at least $170 million, representing strong growth over 2020

“We will close out 2021 with record annual revenue and adjusted EBITDA due to outstanding execution by our global team which continues to gain market share while also dealing with extreme supply chain disruption,” commented Tim Close, President & CEO of AGI. According to Tim Close, President & CEO of AGI, this quarter was affected by supply chain disruption. However, this impact will ease in the fourth quarter and into 2022 as we have good visibility to strong fourth quarter results and substantial growth for the year over 2020. Supply chain problems and COVID-related restrictions have had a significant impact on our Technology business. These issues have been more severe than we anticipated. We have made significant progress in our IoT product, production automation and capacity expansion initiatives despite these issues affecting near-term Technology growth. As a result, we are well positioned to ramp up Technology growth as we head into 2022.”

Offering of Convertible Unsecured Subordinated Debentures
AGI also announced that it has reached an agreement with a syndicate of underwriters led by CIBC Capital Markets (the “Underwriters”), pursuant to which AGI will issue on a “bought deal” basis, subject to regulatory approval, $100,000,000 aggregate principal amount of convertible unsecured subordinated debentures (the “Debentures”) at a price of $1,000 per Debenture (the “Offering”). AGI has granted to the Underwriters an over-allotment option, exercisable in whole or in part for a period expiring 30 days following closing, to purchase up to an additional $15,000,000 aggregate principal amount of Debentures at the same price. If the over-allotment option is fully exercised, the total gross proceeds from the Offering to AGI will be $115,000,000.

The net proceeds of the Offering will be used to redeem Ag Growth’s outstanding 4. 85% Convertible Unsecured Subordinated Debentures due June 30, 2022 (the “June 2022 Debentures”) and for general corporate purposes.

A preliminary short form prospectus qualifying the distribution of the Debentures will be filed with the securities regulatory authorities in each of the provinces of Canada (other than Quebec). Closing of the Offering is expected to occur on or about November 3, 2021. The Offering requires regulatory approvals including approval by the Toronto Stock Exchange.

The Debentures will bear interest from the date of issue at 5. 00% per annum, payable semi-annually in arrears on June 30 and December 31 each year commencing June 30, 2022. The Debentures will have a maturity date of June 30, 2027 (the “Maturity Date”).

The Debentures will be convertible at the holder’s option at any time prior to the close of business on the earlier of the business day immediately preceding the Maturity Date and the date specified by AGI for redemption of the Debentures into fully paid and non-assessable common shares (“Common Shares”) of the Company at a conversion price of $45. 14 per Common Share (the “Conversion Price”), being a conversion rate of approximately 22. 1533 Common Shares for each $1,000 principal amount of Debentures.

The Debentures will not be redeemable by the Company before June 30, 2025. On and after June 30, 2025 and prior to June 30, 2026, the Debentures may be redeemed in whole or in part from time to time at AGI’s option at a price equal to their principal amount plus accrued and unpaid interest, provided that the volume weighted average trading price of the Common Shares on the Toronto Stock Exchange for the 20 consecutive trading days ending on the fifth trading day preceding the date on which the notice of the redemption is given is not less than 125% of the Conversion Price. On and after June 30, 2026, the Debentures may be redeemed in whole or in part from time to time at AGI’s option at a price equal to their principal amount plus accrued and unpaid interest regardless of the trading price of the Common Shares.

Redemption of June 2022 Debentures
Concurrent with the Offering, AGI also announced today that it has given notice of its intention to redeem its June 2022 Debentures in accordance with the terms of the supplemental trust indenture dated April 25, 2017, governing the June 2022 Debentures. The redemption of the June 2022 Debentures will be effective on November 16, 2021 (the “Redemption Date”). Upon redemption, AGI will pay to the holders of June 2022 Debentures the redemption price (the “Redemption Price”) equal to the outstanding principal amount of the June 2022 Debentures to be redeemed, together with all accrued and unpaid interest thereon up to but excluding the Redemption Date, less any taxes required to be deducted or withheld.

This press release is not an offer of Debentures for sale in the United States. The Debentures may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended, or an exemption from such registration. The Company has not registered and will not register the Debentures under the U.S. Securities Act of 1933, as amended. The Company has no plans to offer Debentures for public sale in the United States. This press release does not constitute an offer to buy, solicitation, or sale of the Debentures in the United States.

AGI Company Profile
AGI is a provider of the physical equipment and digital technology solutions required to support global food infrastructure including grain, fertilizer, seed, feed, and food processing systems. AGI operates manufacturing plants in Canada, the United States and Brazil. It also distributes its products worldwide.

For More Information Contact:
Andrew Jacklin
Director, Investor Relations
+1-437-335-1630
investor-relations@aggrowth.com

CAUTIONARY STATEMENTS

Preliminary Financial Information
The Company’s expectations for Q3 2021 sales to increase relative to Q3 2020 but for higher steel prices and supply chain challenges to result in lower adjusted EBITDA on a year-over-year basis, are based on, among other things, AGI’s financial results for the three months ended September 30, 2021. AGI’s financial results for the three months ended September 30, 2021 have not yet been finalized or approved and as such, such estimates and guidance are subject to the same limitations and risks as discussed under Forward-Looking Information set out below. Accordingly, AGI’s guidance for the three months ended September 30, 2021 may change upon the completion and approval of the financial statements for such period and the changes could be material.

Non-IFRS Measures
In analyzing our results, we supplement our use of financial measures that are calculated and presented in accordance with International Financial Reporting Standards (“IFRS”) with a number of non-IFRS financial measures, including “adjusted EBITDA”. Non-IFRS measures are a numerical measure that shows a company’s financial performance, cash flow, and historical performance. They can exclude [includes] amounts or be subject to adjustments that have an effect on excluding [including] amounts that are included [excluded] within the most comparable measures calculated in accordance with IFRS. Non-IFRS financial measurements are not standardised. Therefore, it might not be possible for these financial measures to be compared with non-IFRS financial measure of other companies having similar or identical businesses. Investors are strongly encouraged to read all of our publicly filed financial reports and consolidated financial statements. We recommend that you not rely on any one financial measure.

We use these non-IFRS financial measures in addition to, and in conjunction with, results presented in accordance with IFRS. These non-IFRS measures are a different way to view our operations. They can be viewed in conjunction with our IFRS results, and the reconciliations to corresponding IFRS measures. This may help us understand trends and factors that affect our business.

In our Q2 MD&A and annual MD&A, we discuss the non-IFRS financial measures, including the reasons that we believe that these measures provide useful information regarding our financial condition, results of operations, cash flows and financial position, as applicable, and, to the extent material, the additional purposes, if any, for which these measures are used. Our annual MD&A and Q2 MD&A provide reconciliations of non-IFRS financial measurements to the most closely comparable IFRS measures.

Management believes that the Company’s financial results may provide a more complete understanding of factors and trends affecting our business and be more meaningful to management, investors, analysts and other interested parties when certain aspects of our financial results are adjusted for the gain (loss) on foreign exchange and other operating expenses and income. These are not IFRS measures. Non-IFRS adjusted financial results, and non-IFRS financial measurements are used by management to evaluate and measure the business’ performance and discuss results with analysts, investors, banks, and other interested parties.

References to “EBITDA” are to profit before income taxes, finance costs, depreciation, amortization, share of associate’s net loss and revaluation gains. Referring to “adjusted EBITDA”, means EBITDA before foreign exchange gain or losses, non-cash compensation expenses, gain/loss on financial instruments, M&A costs, transaction and transitional cost, gain/loss on the sale or lease of property, plant and equipment, and gain on settlement of lease liabilities and equipment rework expenses. EBITDA and adjusted EBITDA, according to management, are valuable supplementary measures for evaluating the Company’s performance. Investors are reminded that EBITDA or adjusted EBITDA cannot replace profit or loss or cash flows from investing, operating or financing activities. They should only be used to measure the Company’s liquidity.

Forward-Looking Information
This press release contains forward-looking statements and information [collectively, “forward-looking information”] within the meaning of applicable securities laws that reflect our expectations regarding the future growth, results of operations, performance, business prospects, and opportunities of the Company. Forward-looking statements and information that are not historical in nature are included herein. The words “anticipate”, estimate”, “believe”,” “continue”, Forward-looking Information

2022 are intended to identify forward looking information. They reflect our expectations regarding the future growth, results of operations, performance, business prospects and opportunities. Forward-looking information is subject to known and unknown risks, uncertainties, and other factors that could cause actual results or events not to be as anticipated. This press release may also contain forward-looking information that has been attributed to third parties. Forward-looking information should not be relied upon as it does not guarantee that the plans, intentions, or expectations will be realized. In particular, the forward-looking information in this press release includes: the proposed timing of completion of the Offering and redemption of the June 2022 Debentures; the anticipated use of the net proceeds of the Offering; the reaffirmation of our previously disclosed outlook for near-term financial results, including our expectations for Q3 2021 sales to increase relative to Q3 2020 but for higher steel prices and supply chain challenges to result in lower adjusted EBITDA on a year-over-year basis, for strong sales as well as adjusted EBITDA growth in Q4 2021, and the amount of our full year 2021 adjusted EBITDA; our expectation to close out 2021 with record annual revenue and adjusted EBITDA; our expectation for supply chain disruptions to ease in the fourth quarter and into 2022; our expectation for strong fourth quarter results and substantial growth for 2021 over 2020; and our belief that we are well positioned to ramp up our Technology business growth as we head into 2022. Such forward-looking information reflects our current beliefs and is based on information currently available to us, including certain key expectations and assumptions concerning: the anticipated impacts of the COVID-19 outbreak on our business, operations and financial results; future debt levels; anticipated grain production in our market areas; financial performance; the financial and operating attributes of recently acquired businesses and the anticipated future performance thereof and contributions therefrom; business prospects; strategies; product and input pricing; regulatory developments; tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; political events; currency exchange and interest rates; the cost of materials, labour and services; the value of businesses and assets and liabilities assumed pursuant to recent acquisitions; the impact of competition; the general stability of the economic and regulatory environment in which the Company operates; the timely receipt of any required regulatory and third party approvals; the ability of the Company to obtain and retain qualified staff and services in a timely and cost efficient manner; the timing and payment of dividends; the ability of the Company to obtain financing on acceptable terms; the regulatory framework in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its products and services. Forward-looking information is subject to significant risks and uncertainties. A number of factors could cause actual results to differ materially from results discussed in the forward-looking information, including: the finalization of AGI’s financial statements for the three and nine month periods ended September 30 2021; the failure or delay in satisfying any of the conditions to the completion of the Offering; the effects of global outbreaks of pandemics or contagious diseases or the fear of such outbreaks, such as the COVID-19 pandemic, including the effects on the Company’s operations, personnel, and supply chain, the demand for its products and services, its ability to expand and produce in new geographic markets or the timing of such expansion efforts, and on overall economic conditions and customer confidence and spending levels; changes in international, national and local macroeconomic and business conditions, as well as sociopolitical conditions in certain local or regional markets; weather patterns; crop planting, crop yields, crop conditions, the timing of harvest and conditions during harvest; the ability of management to execute the Company’s business plan; seasonality; industry cyclicality; volatility of production costs; agricultural commodity prices; the cost and availability of capital; currency exchange and interest rates; the availability of credit for customers; competition; AGI’s failure to achieve the expected benefits of recent acquisitions including to realize anticipated synergies and margin improvements; changes in trade relations between the countries in which the Company does business including between Canada and the United States; cyber security risks; the risk that the assumptions and estimates underlying the provision for remediation in our financial statements and related insurance coverage for the bin collapse disclosed in our public filings will prove to be incorrect as further information becomes available to the Company; and the risk that the Company incurs material liabilities as a result of litigation and claims arising from such bin collapse. These risks and uncertainties are listed under “Risks & Uncertainties” in the Q2 MD&A, our Annual MD&A, and our Most Recent Annual Information Form. All of these documents are available under our Company profile on SEDAR [www.sedar.com].. These factors must be carefully considered and readers shouldn’t place undue dependence on forward-looking information from the Company. Actual results may not be comparable to the forward-looking information. The preparation of financial statements according to IFRS requires that management make certain judgments regarding the reported amounts of assets and liabilities, revenues, expenses, and contingent liabilities. These estimates can change and have a positive or negative effect on profit depending on how much information is available. The provision for remediation in relation to the bin collapse required substantial estimates and judgments about what will be required. This provision is based upon management’s current assumptions and estimates. It will be subject to change as more information becomes available to Company. This cautionary statement expressly qualifies forward-looking information in this press release. This press release contains forward-looking statements as of the date it was issued. AGI does not assume any obligation to update forward-looking material to reflect changes in information, future events, or other circumstances, unless required by securities law.

Also included in this press release are estimates of AGI’s Q3 and Q4 2021 sales and adjusted EBITDA, and full year 2021 adjusted EBITDA and revenue, which are based on, among other things, the various assumptions disclosed in this news release. To the extent such estimates constitute financial outlooks, they were approved by management on October 14, 2021 and are included to provide readers with an understanding of AGI’s anticipated sales and adjusted EBITDA for the relevant periods based on the assumptions described herein and readers are cautioned that the information may not be appropriate for other purposes.

1 See “Non-IFRS Measures”.

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