Business
Sun Gro acquisition strengthens long-term peat supply
Sun Gro acquisition strengthens long-term peat supply.
About this update from Coloured Ties Capital Inc
[{"type":"text","content":"\n\n\n\n\nTrading Symbol: The Toronto Stock Exchange - GRO.UN\n\nVANCOUVER, Aug. 10 /CNW/ - Sun Gro Horticulture Income Fund today\nannounced that its wholly owned subsidiary, Sun Gro Horticulture Canada Ltd.\n(Sun Gro), has agreed to purchase substantially all of the operating assets of\nFort Frances, Ontario peat moss producer, Normiska Peat Inc. from Normiska\nCorporation. The $3.3 million purchase price includes approximately\n$0.7 million for product inventory on hand as at August 1, 2006.\nThe transaction, which is expected to close on August 15, 2006,\nsignificantly increases Sun Gro's central Canadian harvest capacity and\nenhances the company's geographic diversification. Of Normiska's total 1,440\nacres of professional grade peat bogs, nearly 1,300 acres have yet to be\ndeveloped, providing Sun Gro with substantial long-term harvest growth\npotential. The acquisition also includes a peat processing plant and related\nharvesting equipment.\n\"The Normiska acquisition will further strengthen our peat supply\nposition in our core professional growers' market, while giving us a presence\nin an entirely new harvest area,\" said Mitch Weaver, President and CEO of Sun\nGro and a Trustee of the Fund. \"The Fort Frances location is ideally situated\nto serve our customers in the US Midwest, as well as within economical\nshipping range of our Michigan growing mix plant. Ongoing development of the\nnew bog will provide a growing source of high quality professional peat for\nyears to come.\"\nThe acquisition was funded through Sun Gro's existing acquisition line of\ncredit and is expected to be accretive to the Fund's unitholders beginning in\n2007. With planned expansion of the harvest area over the coming months, the\nNormiska peat bog is expected to add approximately 250,000 equivalent bales\n(Sun Gro's standard unit of volume measurement, referring to 10 cubic feet of\npeat) to the company's 2007 peat harvest. At current peat prices and foreign\nexchange rates, this could support $2.4 million in additional sales beginning\nnext year.\n\nIncome Fund Profile\nSun Gro Horticulture Income Fund was launched with the completion of an\nInitial Public Offering of 22,023,000 trust units on March 27, 2002. The Fund\nis dependent on Sun Gro's operations, with monthly distributions to its\nunitholders based entirely on Sun Gro's performan...