Romanian organic fertilizer producer Norofert to buy 1,000-hectare farm near the Danube

Romanian organic fertilizer producer Norofert (NRF), one of the fastest-growing companies listed on the Bucharest Stock Exchange (BVB), plans to buy a 1,000-hectare farm near Zimnicea, in southern Romania. The company has signed a non-binding agreement in this sense. The value of this transaction amounts to RON 9.5 mln (almost EUR 2 mln).

"Since our listing on BVB, one of our ideas for developing the business was to acquire a farm that is already equipped and ready to operate from day one. In the last year, we have analyzed several possible investments, and we decided to purchase the farm located in Zimnicea, which is in excellent condition. The soil's quality and the fact that the farm is located in the proximity of the Zimnicea Port on the Danube are some of the strengths for which we were determined to make this investment in Teleorman County, where agriculture is a tradition. We want this new line of business to become a strategic direction in the development of Norofert Group," said Vlad Popescu, CEO of Norofert.

The farm, operated by a local company established in 2006, has 1,000 hectares of leased agricultural land. It is 84% compact and has 400 hectares already irrigable. Norofert plans to introduce organic farming on the whole surface in 2021.

Located less than 5 km from the Zimnicea Port on the Danube, Norofert plans to develop loading barges capacity for its organic grain trading business. This loading capacity presents an excellent logistic hub for Norofert's main business. Any bio crops, either produced or received in exchange for the organic inputs, can be sold for export by the Danube.

The farm comes with approximately 3,000 sqm of warehouses and a full range of farm equipment that is three years old at most, in excellent condition and able to operate more than 1,800 hectares of land. In the short term, Norofert plans to carry out investments to modernize and expand the storage capacity, expand the arable land to 2,000 hectares and transform part of the farm into a testing facility for its products.

Economically, the farm activity's effects will be visible starting next year. According to initial forecasts made by Norofert, the total revenues from wheat and sunflower crops as well as subsidies will reach RON 7.5 million (EUR 1.54 mln) in 2022, and the profit is estimated at RON 3.5 million (EUR 0.72 mln).

The company will finance the acquisition through a credit facility provided by the bank and its own funds. The transaction is subject to the approval of the General Meeting of Shareholders scheduled for April 20, 2021.

Norofert has an ongoing capital increase operation through which it plans to raise RON 7.2 mln (EUR 1.48 mln) from its shareholders and investors on the Bucharest Stock Exchange. The company will sell 550,000 new shares at a price of RON 13.1161 per share. The preemption rights for the capital increase started trading on the Bucharest Stock Exchange on Monday, February 22. Investors will be able to buy one new share for each 14.59 preemption rights held (each right representing an existing share).