Ceres Global Ag Corp., owner of the Northgate, Sask., grain terminal, announced today that is hoping to raise $12.6 million by selling nearly 2.8 million common shares — about 10 percent of the company’s total outstanding shares — in a private placement offer.
According to a Sept. 20 news release, Ceres will sell “on a non-brokered private placement basis” a total of 2,793,499 common shares.
VN Capital Fund C, an investment fund managed by New York investment firm VN Capital Management, is expected to purchase nearly 2.76 million shares.
The shares will be sold at a price of $4.53 each, a 5.3 percent premium based on the volume weighted trading price on the Toronto Stock Exchange during a five-day period that ended Aug. 30, 2019 .
Net proceeds from the private placement will be used initially to repay debt incurred in connection with inventory financing and later to fund anticipated growth-based projects.
As part of the agreement, VN Capital, for a period of 18 months after the closing of the private placement, will not be permitted, without the consent of the company’s board of directors, to purchase any additional company shares, except from private parties in blocks of 250,000 shares or more.
Within a few hours of announcing the arrangement, common shares (CRP.TSX) dropped by nearly 12 percent.
Shortly before 12 noon CST on Sept. 20, shares were trading at $3.82, down from $4.49 at the exchange’s opening bell.
Earlier this month, Ceres released its fiscal year-end results, reporting full-year revenues of US$438 million for the 12-month period ending June 30, up from $411 million a year earlier.
During the same 12-month period, the company reported a net income loss of $16.8 million, up from the previous year’s loss of $556,000.
Company officials said three non-recurring events contributed to the $16.8 million loss, including an $8.2 million legal settlement with Scoular, a $4 million amortization of intangible assets and a $1.9 million write-down of portfolio investments.
“While the environment continues to be challenging for our industry, Ceres’ growth plan continues to gain traction and we expect financial results to continue along their current positive trend,” said Ceres president and chief executive officer Robert Day.
“Meanwhile, we continue to review potential growth opportunities and we plan to add more complementary businesses and assets to our network in fiscal year 2020.”
In mid-August, Minneapolis-based Ceres acquired Delmar Commodities, a grain merchandising and processing company based in Winkler, Man.
Ceres acquired 100 percent of Delmar’s issued and outstanding shares for C$15.25 million and the assumption of about $7.6 million in existing term debt.
Ceres’ other Canadian assets include a bulk grain-handling terminal and export facility at Northgate, Sask., and a 17 percent interest in Canterra Seeds.