22/11/2007 - 11:33

Great Southern buys Olea's Dandaragan assets for $18.7m

22/11/2007 - 11:33

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Ascot-based olive oil maker Olea Australis Ltd will sell its Dandaragan operations, with the exception of its branding, to subsidiaries of West Perth-based Great Southern Ltd for $18.7 million, the company has announced.

Great Southern buys Olea's Dandaragan assets for $18.7m

Ascot-based olive oil maker Olea Australis Ltd will sell its Dandaragan operations, with the exception of its branding, to subsidiaries of West Perth-based Great Southern Ltd for $18.7 million.

The purchase comes just weeks after Great Southern agreed to buy 14,700ha of plantations and 50 per cent of a Bunbury woodchip mill for almost $50 million from entities linked to Korean conglomerate Hansol.

The interest in soft commodities is rising, with Coogee Chemicals chairman Gordon Martin recently backing a recapitalisation of Fremantle-based Frankland River Olive Company Ltd, which is aiming to raise a total of $5.9 million through a placement and rights issue.

Mr Martin's Chemco Pty Ltd may emerge with a shareholding in excess of 25 per cent of the olive oil producer.

 

The full text of a company announcement is pasted below

The Directors of Olea Australis Limited (Olea) wish to advise that subject to shareholder approval they have today signed an agreement with subsidiaries of Great Southern Limited (GSL) to sell to GSL a substantial proportion of all of the assets owned by Olea for $18.75 million on terms, conditions and provisions set out in an Asset Sale Agreement. In addition, Olea could receive payments of up to an estimated $2.25 million from a share of the proceeds of sale of the 2008 harvest. The sale of assets by Olea to GSL would include the land at Dandaragan including the olive grove, buildings and all associated plant and equipment, but would exclude the Dandaragan Estate brand. On completion of the sale of the assets contemplated by the agreement Olea would continue as an ASX listed company selling high quality olive oil under its Dandaragan Estate brand.

The Agreement is conditional on:

  1. Olea obtaining approval from its shareholders to the purchase of the assets by the Buyers; and
  2. The successful transfer of a water license, currently owned by the Sellers, to the Buyers. To this end, the Sellers and Buyers are working together with the relevant regulatory authorities to ensure completion of the transfer.

The main terms and conditions of the agreement are:

  1. The Purchase Price must be paid by the Buyers to the Sellers as follows:
    1. $8.0 million on the settlement date (anticipated to be on 7 January 2008), with adjustments as provided for by the Agreement;
    2. $10.75 million on 1 July 2008 (to be secured by an unconditional bank guarantee). $710,000 of this payment is subject to certain terms and conditions being met by December 2008;
  2. The Sellers will receive a share of the net sales proceeds of the realisation of the 2008 harvest:
    1. If the net sales proceeds are $2 million or less then the proceeds are paid to the Seller;
    2. If the net sales proceeds exceed $2 million, then the Sellers will receive $2 million, plus 50% of any amount by which the proceeds exceed $2 million;
    3. All costs arising out of the management of the olive orchard, harvesting and the processing of the olives will be borne by the Buyers from the date of the shareholders' meeting approving the sale;
    4. Olea Marketing will purchase 50,000 litres of Dandaragan Estate 2008 extra virgin olive oil at the average wholesale price;
    5. The Buyers will appoint Olea as a marketing agent for the sale of the 2008 Harvest. Olea Marketing will be reimbursed for 50% of all reasonable out of pocket expenses in carrying out its functions as agent but with a limit of $50,000; and
    6. All full time employees of the Sellers employed at the Dandaragan olive grove will be offered employment by the Buyers on terms that are comparable or superior to their existing terms of employment.

It is the Directors' intention, should the transaction proceed to finalisation, to return a significant majority of the cash to shareholders by way of dividend or return of capital, subject to the requirements of the Corporations Act and tax considerations. Only sufficient funds will be retained by the Company to allow it to continue its operations and to ensure that the value of the remaining assets of the Company will be maximised for shareholders.

A notice of meeting with further details will be posted to shareholders shortly.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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