Wingara Ag (ASX:WNR) has announced the sale and lease back of the Austco Polar Cold Storage property, located in Laverton North, Victoria.
Commercial property fund manager, KordaMentha Funds Management, will acquire the property for $21m, which will crystallise a $5m profit on the sale. The proceeds will be used the retire secured debt related to Austco Polar boost cash reserves for fodder product purchases in the upcoming 2019/2020 season. Settlement is expected to occur before 23 August 2019.
As part of the transaction, Wingara has entered into a 15 year lease for Austco with initial annual rent of $1.8m pa. Wingara will continue to operate the Austco business from the same premises and none of Wingara’s operations will be impacted by this transaction.
Wingara Ag is building an end-to-end export-oriented agricultural infrastructure platform capable of scaling industrial processing and marketing capacity within the food supply chain.
The platform is service oriented around export focused capabilities and strategic assets which are high barriers to entry. The company is and will continue to invest in strategic logistics and processing assets in the supply chain to provide greater control over the quality and movement of products.
Wingara’s model provides great leverage to the rising demand from Asia for protein and high-quality agricultural produce whilst mitigating weather risk and earnings volatility which are traditional features of agricultural investment. The model is based on a multi-product strategy and geographic supply diversification which will be further developed as the company pursues additional investment opportunities.
The acquisition of Austco Polar Cold Storage in April 2018 and commissioning of a new greenfield fodder processing plant in January 2019 were transformative and provided the scale which has enabled the company to breakthrough to sustainable profitability.
The marked reduction in net debt following the sale and lease back of the APCS property has positioned the balance sheet to support the next acquisition.
Strong growth is anticipated over the next few years as the company realises efficiency gains, increases storage and processing capacity and further diversifies its infrastructure asset base.
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