CANADA – Plant-based foods and beverages manufacturer, SunOpta Inc has entered into a financing agreement with Oaktree Capital Management and Engaged Capital to invest up to a total of US$60 million in SunOpta.
Oaktree and Engaged have committed to purchase up to US$60 million of newly created Series B exchangeable preferred shares to be issued by the company’s wholly-owned subsidiary, SunOpta Foods Inc. in two tranches.
The first tranche consists of US$30 million of Series B-1 preferred which the company said will be issued on or about April 24, 2020 and a second tranche of Series B-2 Preferred of up to US$30 million to be issued by July 15, 2020.
Commenting on the arrangement, Joe Ennen, CEO of SunOpta said: After concluding a comprehensive review of financial alternatives involving a Special Committee of the Board, we are excited to extend our partnership with Oaktree and Engaged.
“They truly appreciate SunOpta’s unique position in the market and the potential value that can be created for all of our shareholders through accelerated growth.
“We believe this strategic option provides the highest risk-adjusted return from the many options evaluated by the Special Committee,”
SunOpta said that it will use the proceeds from the equity investment to invest in the company’s plant-based foods and beverages business, primarily to add capacity and to provide incremental liquidity given the current general economic uncertainty.
After growing its revenues by 15% and gross profit by 45% in plant-based foods and beverages in 2019, Joe says that the company is confident in the long-term growth potential of the plant-based food segment.
“Our plant-based food and beverage business is the growth engine of the company delivering outstanding revenue and EBITDA growth.
“We are making significant investments in this business now to ensure that we can continue to drive aggressive growth in 2021 and beyond,” Joe said.
According to the company, continued migration towards plant-based beverages is creating structural changes in the milk beverage landscape, a space which it has earmarked to drive growth.
The company notes that the plant-based beverage category growth is being fueled by 5 underlying consumer drivers that represent a generational shift in preferences and purchase drivers.
The consumers believe in the health benefits of plant-based beverages; dairy allergies and sensitivities; concerns about animal welfare; increasing consumer taste preference for plant-based foods and the sustainability aspect attributed to plant-based foods were cited as major factors shaping the plant-based industry.
The company is currently investing on capacity expansion of its extraction business and is planning two additional expansion projects to increase capacity and capabilities across its national footprint.
“We expect all 3 of these projects to come online in late Q4 2020, and we feel our current customer pipeline will allow for solid utilization out of the gate as we look to drive growth in 2021 and 2022,” the company said in a statement while releasing its Q4 financial report.
SunOpta’s plant-based food and beverage segment is composed of plant-based beverages such as soy, almond and oat and its broth business where it converts plants into the concentrated base for making food and beverages.