"Since our listing on BVB, one of our ideas for developing the business was to acquire a farm that is already equipped and ready to operate from day one. In the last year, we analysed several possible investments and we decided to purchase the farm located in Zimnicea, which is in excellent condition. The soil's quality and the fact that the farm is located in the proximity of the Zimnicea Port on the Danube are some of the strengths for which we were determined to make this investment in Teleorman County, where agriculture is a tradition. We want this new line of business to become a strategic direction in the development of Norofert Group," said Vlad Popescu, CEO of Norofert SA.
The farm, operated by a local company established in 2006, has 1,000 hectares of leased agricultural land. It is 84% compact, has 400 hectares already irrigable, and the lease price is attractive. Norofert plans to introduce organic farming on the whole surface in 2021.
Located within a 5 kilometres distance from the Zimnicea Port on the Danube, Norofert plans to develop loading barges capacity for its trading organic cereals business. This loading capacity presents an excellent logistic hub for Norofert's main business. Any bio crops, either produced or received in exchange for the organic inputs, can be sold for export by the Danube.
The farm comes with approximately 3,000 square meters of warehouses and a full range of farm equipment that is three years old at most, in excellent condition and able to operate more than 1,800 hectares of land. In the short term, Norofert intends to carry out investments to modernize and expand the storage capacity, expand the arable land to 2,000 hectares and transform part of the farm into a testing facility for Norofert's products.
Through the synergies achieved at the business level, Norofert expects the farm's financial benefits to be significant. Economically, the farm activity's effects will be visible starting next year. According to initial forecasts made by Norofert, the total revenues from wheat and sunflower crops as well as subsidies will reach 7.5 million lei in 2022, and the profit is estimated at 3.5 million lei.
The acquisition will be financed through a mix of a credit facility provided by the bank and the company's funds. The transaction is subject to the approval of the General Meeting of Shareholders of the Company, scheduled for April 20, 2021.
Norofert Group is listed on the AeRO market of the Bucharest Stock Exchange. The company has a market capitalization of 215 million lei. In 2020, shares of Norofert were the most traded financial instruments on the AeRO market.
On February 22, 2021 the capital increase process through which the company plans to raise over 7 million lei begun. In the first phase, the investors can trade the pre-emptive rights. After the trading period, the holders of NRFR01 rights will be able to subscribe the new shares during the 1st Stage of the increase, between March 12 and April 11. The subscription ratio is 14.58898 preemptive rights for 1 new share.