Agrowill Group changing land management model

By decision of the Board of Agrowill Group, the largest agricultural investment and development company in the Baltic states, the company plans to sell all land currently owned by Agrowill Group in Lithuania to a new investment Land Fund.

“Having analysed land use options and costs, the company’s Board has decided that it is more appropriate to concentrate on the main activities of the Group’s companies, i.e. primary agricultural production. Therefore, land management will be segregated and transferred to the investment Land Fund that will specialise in this area and the agricultural companies of Agrowill Group will lease land required for their activities from this fund,” Valentas Šulskis, General Manager of Agrowill Group, said. The company is expected to receive at least LTL 200 million from this transaction.

According to the management of Agrowill Group, the income from the land sale will not only facilitate repayment of a major part of loans and reduction of the company’s financial liabilities but will also provide additional funds for further development of the Group, acquiring modern and successful agricultural companies in the Baltic states. After repaying a considerable part of debts, the Group’s DEBT/EBITDA ratio is expected to decrease to 2.5–3.5.

“Based on a future financial flow analysis, after selling the land owned by Agrowill Group and investing in the acquisition of new stable agricultural companies, the Group’s cash flows would increase by some LTL 30 million in 2009–2013. This money would be directed to the modernisation of the Group’s activities,” Šulskis said.

Following the land sale, the investment Land Fund will conclude long-term lease agreements (for an average of 15 years) with the agricultural companies owned by Agrowill Group, farmers and other agricultural companies currently leasing agricultural land from Agrowill Group. In such a way, it will create stable and long-term conditions for the agricultural companies and farmers to continue cultivating the land used.

According to the General Manager of Agrowill Group, the conditions of establishment of the investment Land Fund are currently being prepared and coordinated, but funds for the establishment of this fund are planned to be attracted exclusively from institutional investors in the international market. The fund is scheduled to start operating at the end of the first quarter or in the second quarter of 2009.

Some 16,000 ha of land is planned to be sold to the investment Land Fund. Agrowill Group currently owns some 14,500 ha of land, but the land portfolio is planned to be expanded by the end of the year.

Agrowill Group operates 15 agricultural companies. The process of acquisition of two more agricultural companies will be completed in the nearest future. The Group has a herd of over 7,000 dairy cows in the Baltic region.

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