AGI Announces Offering of $100 Million Convertible Unsecured Subordinated Debentures and Redemption of Outstanding Debentures Due December 2022

Winnipeg, MB, March 29, 2022 – Ag Growth International Inc. (TSX: AFN) (“AGI”, the “Company”, “we” or “our”) announced today a financing and operational update.

Offering of Convertible Unsecured Subordinated Debentures

AGI announced that it has reached an agreement with a syndicate of underwriters led by CIBC Capital Markets (the “Underwriters”), pursuant to which AGI will issue on a “bought deal” basis, subject to regulatory approval, $100,000,000 aggregate principal amount of convertible unsecured subordinated debentures (the “Debentures”) at a price of $1,000 per Debenture (the “Offering”). AGI has granted to the Underwriters an over-allotment option, exercisable in whole or in part for a period expiring 30 days following closing, to purchase up to an additional $15,000,000 aggregate principal amount of Debentures at the same price. If the over-allotment option is fully exercised, the total gross proceeds from the Offering to AGI will be $115,000,000.

The net proceeds of the Offering will be used to redeem Ag Growth’s outstanding 4.50% Convertible Unsecured Subordinated Debentures due December 31, 2022 (the “December 2022 Debentures”) and for general corporate purposes.

“This offering addresses our near-term debt maturity while we continue to focus on execution and organic growth opportunities,” commented Tim Close, President & CEO of AGI. “We continue to see strong demand as customers across all segments continue to invest in critical equipment and technologies to support their operations. Backlogs and sales pipelines remain at record levels providing good visibility for 2022. We do expect that a combination of project timing and typical seasonality will shift the growth towards the last nine months of the year, particularly in the second and third quarters.”

Additional operational update:

• Full year 2022 Adjusted EBITDA (see “Non-IFRS measures”) outlook of at least $200 million, representing continued growth and expansion over a record 2021 result, with growth over 2021 to be realized in the last nine months of the year, particularly in the second and third quarters.
• The outlook is supported by our backlog, up 24% year-over-year as of March 27, 2022, and sitting at record-levels on a dollar basis, as well as elevated sales pipelines globally.

A preliminary short form prospectus qualifying the distribution of the Debentures will be filed with the securities regulatory authorities in each of the provinces of Canada (other than Quebec). Closing of the Offering is expected to occur on or about April 19, 2022. The Offering is subject to normal regulatory approvals, including approval of the Toronto Stock Exchange.

The Debentures will bear interest from the date of issue at 5.20% per annum, payable semi-annually in arrears on June 30 and December 31 each year commencing June 30, 2022. The Debentures will have a maturity date of December 31, 2027 (the “Maturity Date”).

The Debentures will be convertible at the holder’s option at any time prior to the close of business on the earlier of the business day immediately preceding the Maturity Date and the date specified by AGI for redemption of the Debentures into fully paid and non-assessable common shares (“Common Shares”) of the Company at a conversion price of $70.50 per Common Share (the “Conversion Price”), being a conversion rate of approximately 14.1844 Common Shares for each $1,000 principal amount of Debentures.

The Debentures will not be redeemable by the Company before December 31, 2025. On and after December 31, 2025 and prior to December 31, 2026, the Debentures may be redeemed in whole or in part from time to time at AGI’s option at a price equal to their principal amount plus accrued and unpaid interest, provided that the volume weighted average trading price of the Common Shares on the Toronto Stock Exchange for the 20 consecutive trading days ending on the fifth trading day preceding the date on which the notice of the redemption is given is not less than 125% of the Conversion Price. On and after December 31, 2026, the Debentures may be redeemed in whole or in part from time to time at AGI’s option at a price equal to their principal amount plus accrued and unpaid interest regardless of the trading price of the Common Shares.

Redemption of December 2022 Debentures

Concurrent with the Offering, AGI also announced today that it has given notice of its intention to redeem its December 2022 Debentures in accordance with the terms of the supplemental trust indenture dated January 3, 2018, governing the December 2022 Debentures. The redemption of the December 2022 Debentures will be effective on May 2, 2022 (the "Redemption Date"). Upon redemption, AGI will pay to the holders of December 2022 Debentures the redemption price (the "Redemption Price") equal to the outstanding principal amount of the December 2022 Debentures to be redeemed, together with all accrued and unpaid interest thereon up to but excluding the Redemption Date, less any taxes required to be deducted or withheld.

This press release is not an offer of Debentures for sale in the United States. The Debentures may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended, or an exemption from such registration. The Company has not registered and will not register the Debentures under the U.S. Securities Act of 1933, as amended. The Company does not intend to engage in a public offering of Debentures in the United States. This press release shall not constitute an offer to sell, nor shall there be any sale of, the Debentures in any jurisdiction in which such offer, solicitation or sale would be unlawful.

AGI Company Profile

AGI is a provider of the physical equipment and digital technology solutions required to support global food infrastructure including grain, fertilizer, seed, feed, and food processing systems. AGI has manufacturing facilities in Canada, the United States, the United Kingdom, Brazil, India, France, and Italy and distributes its product globally.

For More Information Contact:

Andrew Jacklin
Director, Investor Relations
+1-437-335-1630
investor-relations@aggrowth.com

 

CAUTIONARY STATEMENTS

Non-IFRS Measures

In analyzing our results, we supplement our use of financial measures that are calculated and presented in accordance with International Financial Reporting Standards (“IFRS”) with a number of non-IFRS financial measures, including “adjusted EBITDA”. A non-IFRS financial measure is a numerical measure of a company's historical performance, financial position or cash flow that excludes [includes] amounts, or is subject to adjustments that have the effect of excluding [including] amounts, that are included [excluded] in the most directly comparable measures calculated and presented in accordance with IFRS. Non-IFRS financial measures are not standardized; therefore, it may not be possible to compare these financial measures with other companies' non-IFRS financial measures having the same or similar businesses. We strongly encourage investors to review our consolidated financial statements and publicly filed reports in their entirety and not to rely on any single financial measure.

We use these non-IFRS financial measures in addition to, and in conjunction with, results presented in accordance with IFRS. These non-IFRS financial measures reflect an additional way of viewing aspects of our operations that, when viewed with our IFRS results and the accompanying reconciliations to corresponding IFRS financial measures, may provide a more complete understanding of factors and trends affecting our business.

In our annual MD&A, we discuss the non-IFRS financial measures, including the reasons that we believe that these measures provide useful information regarding our financial condition, results of operations, cash flows and financial position, as applicable, and, to the extent material, the additional purposes, if any, for which these measures are used. Reconciliations of non-IFRS financial measures to the most directly comparable IFRS financial measures are contained in our annual MD&A.

Management believes that the Company's financial results may provide a more complete understanding of factors and trends affecting our business and be more meaningful to management, investors, analysts, and other interested parties when certain aspects of our financial results are adjusted for the gain (loss) on foreign exchange and other operating expenses and income. These measurements are non-IFRS measurements. Management uses the non-IFRS adjusted financial results and non-IFRS financial measures to measure and evaluate the performance of the business and when discussing results with the Board of Directors, analysts, investors, banks, and other interested parties.

“Adjusted EBITDA” is defined as profit (loss) before income taxes before finance costs, depreciation and amortization, share of associate’s net loss, gain on remeasurement of equity investment, gain or loss on foreign exchange, non-cash share based compensation expenses, gain or loss on financial instruments, M&A expenses, change in estimate on variable considerations, other transaction and transitional costs, net loss on the sale of property, plant & equipment, gain or loss on settlement of right-of-use assets, gain on disposal of foreign operation, equipment rework and remediation and impairment. Adjusted EBITDA is a non-IFRS financial measure and its most directly comparable financial measure that is disclosed in our consolidated financial statements is profit (loss) before income taxes. Our adjusted EBITDA for the year ended 2021 was $176.3 million. See "Profit (loss) before income taxes and Adjusted EBITDA" in our annual MD&A available under the Company's profile on SEDAR [www.sedar.com]. Management believes that, in addition to profit or loss, EBITDA and adjusted EBITDA are useful supplemental measures in evaluating the Company’s performance. Management cautions investors that EBITDA and adjusted EBITDA should not replace profit or loss as indicators of performance, or cash flows from operating, investing, and financing activities as a measure of the Company’s liquidity and cash flows.

 

Forward-Looking Information

This press release contains forward-looking statements and information [collectively, "forward-looking information"] within the meaning of applicable securities laws that reflect our expectations regarding the future growth, results of operations, performance, business prospects, and opportunities of the Company. All information and statements contained herein that are not clearly historical in nature constitute forward-looking information, and the words “anticipate”, “estimate”, “believe”, “continue”, “could”, “expects”, “intend”, “plans”, “will”, “may” or similar expressions suggesting future conditions or events or the negative of these terms are generally intended to identify forward-looking information. Forward-looking information involves known or unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. In addition, this press release may contain forward-looking information attributed to third party industry sources. Undue reliance should not be placed on forward-looking information, as there can be no assurance that the plans, intentions or expectations upon which it is based will occur. In particular, the forward-looking information in this press release includes: the proposed timing of completion of the Offering and redemption of the December 2022 Debentures; the anticipated use of the net proceeds of the Offering; the reaffirmation of our previously disclosed outlook for near-term financial results, including our expectations for 2022 full-year results. Such forward-looking information reflects our current beliefs and is based on information currently available to us, including certain key expectations and assumptions concerning: the anticipated impacts of the COVID-19 outbreak on our business, operations and financial results; future debt levels; anticipated grain production in our market areas; financial performance; the financial and operating attributes of recently acquired businesses and the anticipated future performance thereof and contributions therefrom; business prospects; strategies; product and input pricing; regulatory developments; tax laws; the sufficiency of budgeted capital expenditures in carrying out planned activities; political events; currency exchange and interest rates; the cost of materials, labour and services; the value of businesses and assets and liabilities assumed pursuant to recent acquisitions; the impact of competition; the general stability of the economic and regulatory environment in which the Company operates; the timely receipt of any required regulatory and third party approvals; the ability of the Company to obtain and retain qualified staff and services in a timely and cost efficient manner; the timing and payment of dividends; the ability of the Company to obtain financing on acceptable terms; the regulatory framework in the jurisdictions in which the Company operates; and the ability of the Company to successfully market its products and services. Forward-looking information involves significant risks and uncertainties. A number of factors could cause actual results to differ materially from results discussed in the forward-looking information, including:; the failure or delay in satisfying any of the conditions to the completion of the Offering; the effects of global outbreaks of pandemics or contagious diseases or the fear of such outbreaks, such as the COVID-19 pandemic, including the effects on the Company's operations, personnel, and supply chain, the demand for its products and services, its ability to expand and produce in new geographic markets or the timing of such expansion efforts, and on overall economic conditions and customer confidence and spending levels; changes in international, national and local macroeconomic and business conditions, as well as sociopolitical conditions in certain local or regional markets; weather patterns; crop planting, crop yields, crop conditions, the timing of harvest and conditions during harvest; the ability of management to execute the Company’s business plan; seasonality; industry cyclicality; volatility of production costs; agricultural commodity prices; the cost and availability of capital; currency exchange and interest rates; the availability of credit for customers; competition; AGI’s failure to achieve the expected benefits of recent acquisitions including to realize anticipated synergies and margin improvements; changes in trade relations between the countries in which the Company does business including between Canada and the United States; cyber security risks; the risk that the assumptions and estimates underlying the provision for remediation in our financial statements and related insurance coverage for the bin collapse disclosed in our public filings will prove to be incorrect as further information becomes available to the Company; and the risk that the Company incurs material liabilities as a result of litigation and claims arising from such bin collapse. These risks and uncertainties are described under “Risks and Uncertainties” our annual MD&A and in our most recently filed Annual Information Form, all of which are available under the Company's profile on SEDAR [www.sedar.com]. These factors should be considered carefully, and readers should not place undue reliance on the Company’s forward-looking information. We cannot assure readers that actual results will be consistent with this forward-looking information. Readers are further cautioned that the preparation of financial statements in accordance with IFRS requires management to make certain judgments and estimates that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. These estimates may change, having either a negative or positive effect on profit, as further information becomes available and as the economic environment changes. Without limitation of the foregoing, the provision for remediation related to the remediation work in respect of the bin collapse required significant estimates and judgments about the scope, nature, timing and cost of work that will be required. It is based on management’s assumptions and estimates at the current date and is subject to revision in the future as further information becomes available to the Company. The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. The forward-looking information included in this press release is made as of the date of this press release and AGI undertakes no obligation to publicly update such forward-looking information to reflect new information, subsequent events or otherwise unless so required by applicable securities law.

Also included in this press release are estimates of full year 2022 adjusted EBITDA, which are based on, among other things, the various assumptions disclosed in this news release. To the extent such estimates constitute financial outlooks, they were approved by management on March 29, 2022 and are included to provide readers with an understanding of AGI's anticipated adjusted EBITDA for the relevant periods based on the assumptions described herein and readers are cautioned that the information may not be appropriate for other purposes.