Rice bran ingredients supplier NutraCea has agreed to sell its cereal ingredients business and certain related equipment to Kerry Group as part of its restructuring strategy.
NutraCea entered Chapter 11 bankruptcy in November, a move that it said would allow it to reduce overheads and sell non-core assets, while it shifts its focus to its core business of stabilized rice bran, rice bran oil, nutraceuticals and baby cereal. The company has emphasized that its signing of this asset purchase agreement is part of these non-core asset sales, and also includes certain equipment from its Phoenix, Arizona plant.
W. John Short chairman and CEO of NutraCea said: "The sale of our cereal ingredients business to Kerry is a further step in the repositioning of NutraCea, as we concentrate on our core businesses of stabilized rice bran, rice bran oil and nutraceutical and pharmaceutical applications derived from stabilized rice bran."
NutraCea said it will produce Kerry cereal ingredients at its Dillon, Montana plant until October 31, 2010, or until Kerry starts producing cereal products using the assets purchased under the agreement, whichever is earliest.
The transaction is worth about $3.9m, plus the cost of NutraCea’s cereal ingredients business inventory, the company said.
Assets included in the deal also include NutraCea’s customer and supplier lists and purchase orders related to the cereal business.
The company listed total assets of $83.7m and total debts of $18.9m when it filed its court papers in November.
NutraCea clarified that neither the Phoenix plant nor the manufacturing assets in its Dillon facility are included in the deal.
Completion of the sale is subject to approval by the US Bankruptcy Court, and to consideration of any better offers, which would also have to be considered by the court.
NutraCea has also agreed that it will not sell or process certain cereal products that could be in competition with the acquisition for a period of five years after the purchase agreement is closed.