KTG Agrar AG expands scope for investment and cuts interest expenses
KTG share admitted to Haspax
Hamburg, 21 September 2010 – KTG Agrar AG (ISIN: DE000A0DN1J4) successfully issued its first corporate bond. At EUR 50 million, the amount of the issue was twice as high as originally planned. The proceeds from the issue will be used to finance the expansion of the core business segments and the repayment of short-term liabilities to reduce interest expenses. “We would like to thank investors for the great interest and the confidence placed in our company,” said Siegfried Hofreiter, CEO of KTG Agrar. “The bond has strengthened our financial foundation even further, enabling us to accelerate our sustainable growth.” In view of the successful performance in the past years, the agricultural company was admitted to the northern German Haspax index, which lists the largest northern German joint stock companies.
Investments in farmland assets
The company intends to expand its farmland in eastern Germany and full EU member Lithuania from a total of 30,500 hectares to 40,000 hectares in the medium term and to increase the percentage of company-owned farmland from 18.5 percent to over 20 percent. This way, the company will benefit not only from growing demand for agricultural resources but also from the growing value of farmland, which is a scarce asset.
Sharp increase in revenues and profits in the biogas segment on the cards
The biogas segment also offers excellent growth prospects and will be expanded swiftly. KTG Agrar intends to increase the biogas production capacity from the current level of 11 MW to at least 20 MW by the end of 2011 and to 25 MW by mid-2012. “When all planned plants operate at full load, we will generate annual revenues of roughly EUR 40 million in the biogas segment alone,” said Dr. Thomas R.G. Berger, KTG Board member in charge of the biogas segment. “Thanks to our integrated concept, we will generate an operating margin in excess of 20 percent.” 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.
Repayment of short-term liabilities to cut interest expenses
The bond is an ideal addition to equity capital and bank loans and thererfor accounts as the strong third pillar to the sustainable business financing. Apart from financing its growth, KTG Agrar will repay high interest bearing short-term liabilities in order to cut its costs. Siegfried Hofreiter: “This will help us reduce our interest expenses and base our company’s funding on a long-term foundation.”
KTG Agrar placed its first bond as a direct paper as well as through the Bondm segment of the Stuttgart stock exchange and met with great interest from private and institutional investors. The original issue amount of EUR 25 million was oversubscribed after only three days. With a term of five years, a fixed interest rate of 6.75 percent p.a. and a minimum investment of EUR 1,000, the “KTG Biowertpapier” is targeted at all investor groups. During the 5-year term, the bond can be traded at the stock exchanges in Stuttgart and Frankfurt.
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 is the production of bio-energy. 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 more 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