EarthRenew Inc., Toronto, announced on Feb. 24 that it has negotiated an increase to its proposed equity ownership stake from 38 percent to 100 percent of the issued and outstanding of Replenish Nutrients Ltd., a privately-held regenerative fertilizer and nutrient company located in Okotoks, Alberta, Canada. The company has entered into a new nonbinding letter of intent that supersedes and replaces the letter of intent dated Dec. 11, 2020 (GM Jan. 15, p. 35), respecting the proposed 38 percent equity acquisition.
Consideration for the proposed acquisition is approximately US$1.1 million in cash and $7.9 million in common shares of EarthRenew.
“The outcome of the diligence process was that it became apparent to both parties that we were more aligned with our collective vision than we originally thought, and the natural next step was for EarthRenew to become much more than a minority owner of Replenish Nutrients,” said EarthRenew’s CEO Keith Driver.
“If consummated, acquiring full ownership is anticipated to allow us to not only add top line revenue and accelerate phase two of our construction plans, but also to invest in the growth of Replenish Nutrient’s manufacturing capacity to address a supply gap for their product. We look forward to the potential to work with the entire Replenish Nutrients team to accelerate growth of the new combined entity, leveraging their experience in the fertilizer and soil solution space,” Driver added.
Replenish Nutrients currently has an established product line that it sells across Western Canada and into the U.S. (North Dakota and Montana), which it said generates strong revenues.
Following the closing of the proposed acquisition, the combined company sees itself as a leader in the regenerative and organic fertilizer space, being able to manufacture, market, and distribute a broad range of high-value crop inputs.
Replenish Nutrients booked revenue of US$5.1 million for second-half 2020 and through the end of January 2021 with a gross margin of approximately 30 percent. The company is forecasting US$4.8 million in revenue for the balance of the first half of 2021. This equates to a total of $9.9 million for the period of July 2020 through June 2021, up from $3.6 million for the same period in 2019/2020.
Replenish Nutrients will continue to operate as a marketing and distribution company as a wholly owned subsidiary of EarthRenew.
EarthRenew transforms livestock waste into organic fertilizer to be used by organic and traditional growers in Canada and the U.S. Located on a 25,000 head cattle feedlot, their flagship Strathmore plant is capable of producing up to four megawatts (MW) per hour of low-cost electricity powered by a natural gas fired turbine. The exhausted heat from the turbine is used to convert manure into certified organic fertilizer.