Trading Symbol: The Toronto Stock Exchange - GRO.UN
VANCOUVER, June 5 /CNW/ - Sun Gro Horticulture Income Fund (the Fund) today announced that its wholly owned subsidiary, Sun Gro Horticulture Canada Ltd. (Sun Gro or the company), has entered into an agreement to acquire Quebec-based peat moss producer Tourbiere Omer Belanger Inc. for $3.9 million.
The transaction, which is expected to close at the end of June 2007, will strengthen Sun Gro's long-term peat supply in eastern Canada while increasing the geographic diversity of its peat harvest resources. The acquisition includes 1,900 acres of largely undeveloped professional grade peat bogs, 140 acres of retail grade bogs and three adjacent production facilities, all located in Quebec.
"The Tourbiere Omer Belanger acquisition will give us a physical presence in Quebec and support our ability to provide uninterrupted supply to our core professional grower customers," said Mitch Weaver, President and CEO of Sun Gro and a Trustee of the Fund. "With 1,615 acres of unopened professional grade bogs and an additional 285 acres that have recently been opened, these new holdings will provide a source of high quality peat for many years to come."
The acquisition will be funded through Sun Gro's existing acquisition line of credit and is expected to be accretive to the Fund's unitholders beginning in 2008. With planned expansion of the harvest area over the coming summer months, the newly-acquired bogs are expected to add approximately 500,000 equivalent bales (Sun Gro's standard unit of volume measurement, referring to 10 cubic feet of peat) to the company's 2008 harvest. "At current peat prices and foreign exchange rates, this could support $4.5 million in additional sales beginning next year, and grow from there," said Weaver.
The transaction will be Sun Gro's third acquisition in 2007. In January, the company established a local manufacturing presence in California, North America's largest horticultural market, by acquiring Sun-Up Horticulture in Sacramento and Kellogg-Rich Grow, LLC in Santa Maria. The two California transactions added four plants to Sun Gro's North America-wide production network.
On completion of the Tourbiere Omer Belanger acquisition, Sun Gro will have 14 Canadian peat and peat-mixing plants and 11 US peat and bark-mixing plants, and approximately 63,000 acres of peat bogs under lease.
Income Fund Profile
Sun Gro Horticulture Income Fund was launched with the completion of an Initial Public Offering of 22,023,000 trust units on March 27, 2002. The Fund is dependent on Sun Gro's operations, with monthly distributions to its unit holders based entirely on Sun Gro's performance.
Company Profile
Sun Gro was founded in 1929 in Vancouver, BC and has grown to become North America's largest producer of sphagnum peat, and the largest distributor of peat moss and peat and bark-based growing media to professional plant growers in the US and Canada. Sun Gro sells its professional products primarily to greenhouse, nursery and specialty crop growers, as well as to golf course developers and landscapers. Sun Gro also sells peat moss and peat-based growing mixes to retail customers, either by way of private label partnerships or under its own brand names. Approximately 80% of the company's sales volume goes to the US.
Forward-Looking Statements
This news release contains forward-looking statements. These statements relate to future events or future performance and reflect Sun Gro's expectations regarding its growth, results of operations, performance, business prospects, opportunities or industry performance or trends. These forward-looking statements reflect management's current internal projections, expectations or beliefs and are based on information currently available. In some cases, forward-looking statements can be identified by terminology such as "may", "will", "should", "expect", "intend", "plan", "anticipate", "believe", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. A number of factors could cause actual events or results to differ materially from those discussed in the forward-looking statements. Important factors that could cause actual results to differ materially from Sun Gro's expectations include, among other things, failure to complete the proposed acquisition, unexpected integration issues, fluctuations in currency exchange rates, changes in tax laws, the impact of adverse weather conditions on harvesting operations, an increase in freight rates, and the impact of an increase in fuel costs. You should specifically consider these factors, including the risks and uncertainties described in the Fund's most recent annual information form for the year ended December 31, 2006. In addition, the Fund's ability to make distributions to unitholders is entirely dependent on Sun Gro's performance. Although management believes that the forward-looking statements contained in this news release are based on reasonable assumptions, readers cannot be assured that actual results will be consistent with such statements. Forward-looking statements are made as of the date of this news release and Sun Gro assumes no obligation to update or revise them to reflect new events or circumstances.
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