Scottsdale / AZ. (rbt) RiceBran Technologies (RIBT), a global leader in the production and marketing of value added products derived from rice bran, announced that the Company has entered into an exclusive strategic supply agreement for organic rice bran and an LLC Agreement for the formation of a jointly owned sales and marketing entity with the Bangkok, Thailand based Narula Group of Companies, one of the world’s largest growers of organic rice, which is controlled by social impact entrepreneur Arvind Narula.
Under the terms of the strategic supply agreement, RIBT will gain exclusive worldwide supply and distribution rights for organic jasmine rice bran and organic rice bran from other rice varieties produced by the Narula Group. The exclusive territory excludes certain South East Asian markets, Germany and the United Kingdom, which will continue to be serviced by Narula Group.
RIBT will purchase organic rice bran from the Narula Group at an agreed price and the Narula Group will receive an additional amount based on a portion of the achieved margin earned by RIBT on the sale of products derived from that organic rice bran («Achieved Margin Share»). The Narula Group has agreed to accept the first 2’660’000 USD of its Achieved Margin Share through the issuance of 950’000 shares of RIBT’s common stock at a fixed purchase price of 2.80 USD per share («Margin-for-Shares Mechanism»), representing a premium of 52 percent to the closing price on the date immediately prior to signing. As the Narula Group earns RIBT common stock through the Margin-for-Shares Mechanism, those earned shares shall be released from escrow on a quarterly basis until such time as the Achieved Margin Share is sufficient to purchase all 950’000 shares.
Additionally, a joint venture company owned 55 percent by RIBT and 45 percent by the Narula Group is being established to market the Narula Group’s non-rice bran products in North America, including organic chia, kale, coconut water and coconut products. Results for the newly established joint venture will be consolidated into RIBT’s financial statements and profits will be shared on a proportional ownership basis by the partners. Both companies expect to bring additional organic products to market in North America in the near future.
W. John Short, CEO and President of RIBT, commented: «According to the NEXT Forecast 2016 published by New Hope Natural Media, sales of natural, organic and functional foods reached 110 billion USD in 2014, or 15 percent of total US food and beverage sales; are the fastest growing segment in the US food and beverage market; and are experiencing double digit growth. And within the natural, organic and functional food segment, non-GMO products are gaining ground even faster. The agreements reached with the Narula Group add organic rice bran and other healthy, natural and organic products to our existing offerings of non-GMO, healthy and natural functional food products and significantly broadening our product range, putting RIBT in an even better position to take advantage of rapidly developing consumer trends away from dietary supplements and toward healthy whole food nutrition through functional foods and ingredients».
Arvind Narula, President of the Narula Group, commented: «I have spent the last 30 years developing a for-profit business model based on organic products that gives back to the economically disadvantaged and culturally indigenous groups who work with us to grow our crops. I am excited to enter into this strategic relationship with RiceBran Technologies, a company that shares our deeply held philosophy that businesses need to be socially and environmentally responsible and give back to the communities where they do business».
RIBT expects sales of high value, high margin organic rice bran and organic non-rice bran products to launch in North America in the second quarter of 2016 and become a significant driver of sales growth in our USA Segment in the coming years. For additional information, please refer to the Company’s Form 8-K filed with the US Securities and Exchange Commission.
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