Omaha / NE. (caf) ConAgra Foods Inc. announced that it has reached an agreement to sell its commodity trading and merchandising operations conducted by ConAgra Trade Group to the Ospraie Special Opportunities fund and other investors for approximately 2,1 billion USD, subject to certain adjustments. The Ospraie Special Opportunities fund is an affiliate of Ospraie Management, a leading investment management firm focused exclusively on commodities and basic industries with approximately nine billion USD under management. ConAgra Trade Group will be renamed Gavilon LLC upon completion of the sale.
Under the terms of the agreement, ConAgra Foods will sell the operations of ConAgra Trade Group, also known as the company´s Trading and Merchandising segment, in exchange for approximately 1,6 billion USD in cash, subject to working capital fluctuations, and 525 million USD (face value) of payment-in-kind debt securities of a newly created Gavilon holding company. The weighted average interest rate on the debt securities is 10,82 percent. The final purchase price will be adjusted based on working capital changes subsequent to February 24, 2008. In addition, ConAgra Foods will receive a contingent right to a portion of future earnings during the remainder of calendar 2008 and a warrant exercisable for eight percent of the equity of the purchaser.
Greg Heckman, president of the ConAgra Foods commercial businesses, will become chief executive of Gavilon upon close of the transaction, which is expected within 60 days, subject to satisfaction of customary closing conditions, including normal regulatory approvals. Gavilon will remain in its current offices in Omaha, Nebraska. Virtually all of the approximately 950 employees of ConAgra Trade Group will become employees of Gavilon. The agreement includes 144 facilities, located primarily in North America. Gavilon will conduct grain and byproducts merchandising and fertilizer distribution, as well as agriculture, energy and other commodity trading activities, and risk management services (press release).
