Agreement includes revenue-sharing arrangement to operate almond orchards and access permanent water rights
Olam Orchards Australia (OOA), a subsidiary of Olam International, has entered into an agreement to sell 89,085 megalitres of its permanent water rights in Australia to a related entity of the Public Sector Pension Investment Board (PSP Investments), a Canadian pension investment manager, for a total consideration of A$490 million (US$332.5 million).
In a separate transaction, PSP Investments has agreed to acquire approximately 12,000 hectares of almond orchards and related assets in Victoria, Australia, which were previously leased to OOA. Both the almond orchards and the associated water rights will continue to be operated by OOA.
OOA has also entered into a new, tiered revenue sharing arrangement with PSP Investments for the almond orchards, related assets and permanent water rights, pursuant to which it will pay PSP Investments a share of revenue from the almond orchards. The arrangement is for an initial period of 25 years with options to renew for another 25 years.
Ashok Kirshen, managing director of Olam and CEO of Edible Nuts, commented: “Consistent with our asset-light approach to tree crop production, this arrangement will enable OOA to focus on operations and continue to deliver best-in-class products and services to customers. I am confident this partnership with PSP Investments will help lead the industry in sustainable farming and agricultural practices, and protect critical natural resources, such as water in Australia.”
Marc Drouin, managing director and head of natural resources, PSP Investments, added: “Our agreement with OOA is consistent with our strategy to partner with best-in-class operators who take the long-term view, and to invest in high-quality agricultural assets globally. It is also quite complementary to our existing permanent crop investments around the world and represents a unique avenue to add scale, particularly in Australia.”
The transaction is expected to be completed in December 2019, subject to customary conditions. On completion, Olam will receive cash proceeds of A$490 million and is also expected to book a one-time pre-tax capital gain of approximately A$311 million (US$211.0 million).
