MVC Capital Announces Sale of Dakota Growers to Viterra for $18.28 per Common Share
Posted on March 10, 2010 at 16:15 PM EST
MVC Capital, Inc. (NYSE: MVC) (the "Fund"), a publicly traded business development company that makes private debt and equity investments, today announced that its portfolio company, Dakota Growers Pasta Company, Inc. (“Dakota Growers”) has signed a definitive merger agreement with Viterra Inc. (TSX: VT) (“Viterra”), Canada’s leading agri-business that provides premium quality ingredients to leading global food manufacturers, pursuant to which a subsidiary of Viterra will acquire all of the outstanding shares of Dakota Growers, a leading producer and marketer of dry pasta products in North America. The all-cash transaction, structured as a tender offer followed by a merger of a Viterra subsidiary and Dakota Growers, has been unanimously approved by the Boards of Directors of both companies.
The transaction represents a total enterprise value of USD$240 million, which includes equity value and anticipated net cash/debt at closing, subject to certain adjustments for transaction costs and other closing adjustments. Dakota Growers reported revenues and EBITDA of approximately USD$275 million and USD$42 million respectively for the latest twelve months ended October 31, 2009. As further described below, the anticipated gross proceeds of approximately $38 million to the Fund resulting from this transaction would exceed the Fund’s current carrying value of its investment in Dakota Growers.
Under the terms of the agreement, Viterra will commence a tender offer to acquire all of the outstanding shares of Dakota Growers’ common stock at a price of $18.28 per share, a premium of 6.2% to the Fund’s carrying value as of its quarter end January 31, 2010. The anticipated proceeds to the Fund will result in a six-year IRR of 27.7% including dividends received and fees earned over the life of the investment. The acquisition is expected to close shortly after completion of a tender of a majority (50.1%) of the outstanding shares of Dakota Growers common stock, the receipt of various regulatory approvals and the satisfaction of other customary closing conditions and contingencies. Taking into account the receipt of the sale proceeds upon the closing of the transaction and based on the Fund's current position, the Fund's debt, net of cash, would be approximately zero.
“Our partnership with Dakota Growers reflects a period in which the company significantly grew revenue and EBITDA, and we believe the business is well-positioned to continue its successful growth strategy,” said Michael Tokarz, Chairman and Portfolio Manager of MVC. “The value created by this merger reflects our continued focus on maximizing our portfolio to enhance value for our shareholders. We are grateful to Dakota Growers’ dedicated team for their strong commitment to the business and look forward to seeking to continue our success of adding substantial value across our entire portfolio of companies.”
“Dakota Growers’ Board of Directors’ entrepreneurial approach and management team’s performance and execution have shaped the company into a world class business. We have enjoyed working with this team for the last six years during which the company has doubled sales and quadrupled EBITDA,” said Shivani Khurana, Managing Director of The Tokarz Group Advisers, LLC, investment adviser to MVC.
Tim Dodd, CEO of Dakota Growers, said, "Viterra’s acquisition of Dakota Growers creates potential for market expansion and greater recognition in the industry. We are grateful for MVC's financial and strategic guidance which positioned our company to take advantage of this exciting opportunity."
Morgan Stanley Inc. acted as exclusive financial advisor to Dakota Growers, and rendered a fairness opinion in the transaction, and Kirkland & Ellis, LLP acted as legal counsel.
About MVC Capital, Inc.
MVC is a business development company traded on the New York Stock Exchange that provides long-term debt and equity investment capital to fund growth, acquisitions and recapitalizations of companies in a variety of industries. For additional information about MVC, please visit the MVC's website at www.mvccapital.com. All media inquiries should be directed to Nathaniel Garnick at 212-687-8080.
About Dakota Growers
Dakota Growers Pasta Company, Inc., headquartered in Carrington, North Dakota, is the third largest manufacturer and marketer of dry pasta products in North America and the manufacturer and distributor of Dreamfields® Healthy Carb Living Pasta. Dreamfields pasta is an excellent source of fiber, has five grams of digestible carbohydrates and a 65% lower glycemic index than regular pasta.
The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, and these factors are enumerated in the company's periodic filings with the Securities and Exchange Commission.
Nathaniel Garnick, 212-687-8080
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