The company stated that it will transfer all its pet food ingredients assets and business to Big Sky, which will be fully dedicated to serving the North American pet food industry with existing products as well as new growth planned through product expansion and new investments.
Earlier this year, in June, GFI announced this transaction that is now coming to fruition.
According to the company’s earlier statement, the company intended to raise approximately S$11.7 (US$8.67) million through an investment in equity and debt by 35 Oak Holdings Ltd in its pet food ingredients division (the “Pet Food Transaction”) as well as a commitment for a further $500,000 (US$370305.00) investment in a concurrent non-brokered private placement for a total expected investment of approximately $12.2 (US$9.04) million.
“We are very pleased to have entered into this letter of intent with 35 Oak in relation to our pet food ingredients division, unlocking significant value for our shareholders and generating substantial capital to strengthen our balance sheet and prepare GFI for the next phase of growth,” said David Hanna, President, and CEO then.
“GFI will continue to manage all aspects of the pet food business and will consolidate its results as a controlled entity while realizing on the value created to date since building out the business unit over the past two years,” he added.
As GFI completes the formation of the new dedicated pet food operations under the Big Sky brand, 35 Oak has advanced a $3.0 (US$2.22) million deposit for the pending investment, which GFI may immediately use to fund its day-to-day operations.
In this transaction, 35 Oak will have a 49.9% equity stake in the created subsidiary. Additionally, 35 Oak will provide a revolving credit facility to Big Sky Milling of which approximately $8.5 (US$6.3) million will be drawn at the closing of the Pet Food Transaction.
Under the terms of the Loan, the formed subsidiary will receive a revolving committed two-year credit facility of up to $10.0 (US7.41) million, bearing interest at an expected rate of 10% per annum, and will be secured by a first-position general security agreement over all of the assets of the subsidiary.
GFI is working to complete the transaction reorganization in September 2023, subject to the completion of definitive agreements, a satisfaction of customary closing conditions, and receipt of regulatory approvals, including the approval of the TSX Venture Exchange (TSXV).