Ag Growth Industries of Swift Current, Sask., has bought the Victory combine pickups line and has offered to buy the assets of PEL Industries Ltd., also of Swift Current.
PEL manufactures agricultural products, including the REM grain vacuum and the Delta harrow, said a company news release.
Terms of the offer include the acquisition of all PEL shares, REM and Delta patents and trademarks, as well as a 34,000-square-foot production plant, for $1.4 million. Related party debt of $1.5 million will be assumed by Ag Growth, of which $530,000 will be payable on closing, with the rest repaid over seven years. All amounts are subject to audit adjustments at the closing.
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A further $325,000 will be contributed to a retirement plan for the seller of the PEL shares. PEL founders Frank and Helen Rempel operated the company for more than 32 years.
Financing is anticipated to include a private placement of Ag Growth securities to third parties.
Rob Stenson, Ag Growth president, said in the release that location of PEL’s plant and Ag Growth’s Batco production facility in Swift Current should open growth possibilities.
The deal is subject to certain conditions including approval by regulatory authorities and Ag Growth’s board of directors. The acquisition is anticipated to close in April.
“Sales of the Victory Pick Up and related parts exceeded $2.5 million in both 1997 and 1998, and with its strong margin we expect it to contribute significantly to our results in the short term,” said Stenson.
Meanwhile, Ag Growth reported a solid third quarter.
For the nine months ended Dec. 31, 1998, revenue was $6.47 million. That is up $3.71 million over the same period last year.
