KTG Agrar issues corporate bond to finance growth
- Corporate bond: 6.75% p.a. / 5-year term / volume up to EUR 25 million
- Investment grade rating (BBB) and creditworthiness seal from Creditreform
- Exploiting the growth opportunities of farming and of producing biogas
- Continued investments in farmland assets
- Company plans accelerated expansion of biogas capacity to 25 MW in 2012
Hamburg, 2 September 2010 – KTG Agrar AG (ISIN: DE000A0DN1J4), one of Europe’s leading agricultural companies, will issue its first corporate bond. With a term of five years, a fixed interest rate of 6.75% p.a. and a minimum investment of EUR 1,000, the corporate bond is targeted at both private investors and asset managers. “Our bond allows investors to generate an attractive return and to benefit from the promising future of the agricultural sector, as demand for healthy food and clean energy continues to grow,” says Siegfried Hofreiter, CEO of KTG Agrar. The issue has a volume of up to EUR 25 million. The bond is available directly from the company(www.ktg.ag)as of 2 September. A dedicated information centre has been established, whose staff provide information on details of the bond and the subscription process. Investors may also subscribe the bond via the Bondm segment of the Stuttgart Stock Exchange. The fact that the bond has been listed here reflects the confidence placed in the company’s solidity and profitability. This is also confirmed by Creditreform’s investment grade rating (BBB) and creditworthiness seal. “The additional capital will increase our flexibility to aggressively continue our sound and profitable growth,” says Siegfried Hofreiter. The proceeds from the issue will be used to finance the expansion of the core business segments.
Investments in farmland assets
KTG plans to expand its farmland in East Germany and EU member Lithuania from 30,500 hectares to 40,000 hectares in the medium term. The company also intends to increase the percentage of own farmland from approx. 18.5% to over 20%, as not only the production of agricultural commodities but also the farmland itself generates a good return. Demand for the scarce resource is high, which means there is great potential for value increases. Siegfried Hofreiter: ”Henry Ford recommended buying farmland already 100 years ago, as it is the only product that can no longer be produced. He was absolutely right.” In East Germany, for instance, the price per hectare has more than doubled since 2005 to EUR 10,000 - in spite of the economic crisis. Nevertheless, the price is still much lower than in West Germany (EUR 26,000).
Biogas segment to be expanded faster than originally planned
The biogas segment also offers excellent growth opportunities and will be expanded faster than originally planned. KTG Agrar intends to increase the biogas production capacity from 11 MW to at least 20 MW by the end of 2011. This target had originally been set for the end of 2012. The production capacity is to reach as much as 25 MW by mid-2012. This is sufficient to cover the energy requirements of more than 40,000 households. The expansion plans may be put into practice shortly. In the past months, KTG Agrar has initiated, and in some cases completed, the project plans for many new sites. Since 2007, the company has operated biogas plants to produce clean energy in the context of an integrated concept. The plants are located at the company’s own farms, allowing it to exploit synergies with regard to human resources and machinery. Apart from maize silage, agricultural residues such as grass and straw are used as input materials. In addition, KTG Agrar increasingly uses intercrops to feed its plants. Millet, for instance, is sown after the summer grain harvest and harvested in November. “The biogas segment generates an EBIT margin in excess of 20 percent already today, and the synergies are far from having been exploited in full,” says Dr. Thomas R.G. Berger, KTG Board member in charge of the biogas segment. “In the coming years, we want to increase the percentage of residues and intercrops from 30 percent to clearly more than 50 percent, thus further increasing the efficiency of the plants.”
About KTG Agrar:
With cultivable land of more than 30,000 hectares, KTG Agrar AG is one of the leading producers of agricultural commodities in Europe. The Hamburg-based company’s core area of expertise is the organic and traditional cultivation of market products such as cereals, maize and rapeseed. For organic market products KTG Agrar is the european market leader. The company mainly produces in Germany but has also operated production in the EU full member state of Lithuania since 2005. The third mainstay the production of bioenergy. At present, KTG Agrar operates biogas plants with a total capacity of around eleven megawatts. In the year 2009, KTG achieved a total output of EUR 59,7 million and EBIT of EUR 9.2 million. Since November 2007 the company is listed on the Frankfurt Stock Exchange and currently mote than 200 employees. Further information can be found at www.ktg.ag.
Contact:
Investor Relations / Press
Fabian Lorenz
IR.on AG
Tel: +49 221 914097 - 6
E-Mail: fabian.lorenz@ir-on.com