You are here
Olam to terminate sale and revenue share arrangement of US onion, garlic processing plant
AGRI-FOOD giant Olam International has decided to terminate the sale and revenue sharing arrangement of its onion and garlic facility in Gilroy, California.
This comes after the company announced last year that it would sell the real estate assets of the facility to Chicago-based investment management firm, Mesirow Financial, for some US$110.3 million. The mainboard-listed company also entered into a tiered revenue sharing arrangement with Mesirow, with whom it was supposed to share a part of the annual revenue from operating the assets for a period of 25 years.
The deal was completed in December 2019, with Olam transferring the property assets, while the consideration was paid by way of a cash deposit and a promissory note issued to the company by Mesirow.
In a bourse filing on Monday, Olam said it was notified by Mesirow that due to "significant financial market disruption/challenge arising from Covid-19", it had been unable to secure the required debt and equity financing to meet its obligations under the promissory note by April 30.
After considering this development and exploring various options, Olam decided that it was "in its best interest" to mutually agree with Mesirow to terminate the revenue sharing arrangement and for Mesirow to transfer the titles of the real estate assets back to the company.
Olam will recognise the assets at current fair value, and any difference between this amount and the consideration will be recorded in the firm's unaudited financial statements for the half year ending June 30, 2020.
The company added that it has started the process of identifying new investors for these assets and will issue an announcement as and when there is a material development.
As at 9.16am on Tuesday, shares in Olam were trading at S$1.49, up S$0.01 or 0.7 per cent.