NADEC signs term sheet with consortium members to buy one of SAGO’s flour mill
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National Agricultural Development Co. (NADEC) entered a term sheet today, April 19, 2021, with consortium members - OLAM International Limited, Al Rajhi International for Investment Co., and Abdulaziz Alajlan & Sons Co. for Commercial and Real Estate Investment - to acquire a flour mill of the two offered for privatization by National Center for Privatization & PPP (NCP) and the Saudi Grains Organization (SAGO).
The joint offer was submitted to the SAGO today, April 19, 2021, after NADEC’s board agreed today on the term sheet, joint bid submission, as well as disclosing directors’ interests, the company said in a statement to Tadawul.
The term sheet sets forth the key commercial terms of the consortium members’ agreement related to formation of a limited liability company with a specified capital and specific ownership percentages of each member.
In the event the joint bid is accepted, the consortium members are expected to complete the final negotiations regarding the final agreements within a period not exceeding three months from the date the results of the joint bid are released.
In case, the joint bid is successful, the new entity will acquire a flour mill, which will be managed and operated as per the requirements of the joint bid.
In the event the joint bid is successful, the term sheet will become binding on the consortium members, following which they will negotiate and agree the final agreements that will govern the formation, management and operation of the new company, and the management and operation of the flour mill acquired by it.
The term sheet contains a number of terms and conditions agreed by the consortium members regarding the commercial business, administrative services and operational services of the flour mill, which will be negotiated and agreed upon in the final agreements in the event the joint bid is awarded to the consortium members.
The acquisition transaction by the new company is intended to be financed through a combination of self-financing by the consortium members and borrowing from local banks by the new entity.
NADEC will announce any further material developments, including results of its submission of the joint bid, as required by the relevant rules and regulations.
The financial implications will be announced following acceptance of the joint bid and signing of the final agreements, NADEC noted.
Sulaiman Al Rajhi Holding Co., as represented on the board of directors of NADEC by Bader Abdulrahman Alsayari, is a related party, due to its percentage ownership in Al Rajhi International for Investment Co.
In January, NADEC signed a memorandum of understanding (MoU) with OLAM International Limited, Al Rajhi International for Investment Co., and Abdulaziz Alajlan & Sons Co. for Commercial and Real Estate Investment for the purpose of submitting a bid to acquire a flour mill.
As part of the Kingdom's Vision 2030, NCP and SAGO intend to privatize two flour mills, aiming to enhance the utilization of government assets, improve their operational efficiency, attract local and international investments, raise the private sector’s contribution to the domestic product, as well as support the local market in general.