Landec Corporation Acquires GreenLine Foods

Landec Corporation

announced today that its wholly owned food subsidiary, Apio, Inc., has acquired GreenLine Foods, Inc. from The Riverside Company, a global private equity firm. GreenLine Foods, headquartered in Perrysburg, Ohio, is the leading processor and marketer of value-added, fresh-cut green beans in North America. The acquisition is expected to be immediately accretive to Landec. For Landec's upcoming fiscal year 2013 beginning May 28, 2012, GreenLine's revenues are projected to be approximately $95 million to $100 million and EBITDA is estimated to be between $10 million to $11 million. Under the agreement with Riverside, Apio acquired all of the outstanding equity interests of GreenLine for $63.0 million in cash with no assumed debt. The agreement also includes future earn-out potential for Riverside of up to $7.0 million based on GreenLine achieving certain financial targets during calendar year 2012. In conjunction with the acquisition, Apio obtained $31.8 million in term financing secured by Apio's and GreenLine's fixed assets. In addition, Apio entered into a five-year, $25.0 million working capital line, with an interest rate of LIBOR plus 2%, based on the combination of Apio and GreenLine accounts receivable and eligible inventory balances. The term debt is comprised of a $12.7 million equipment loan which matures in seven years with a fixed interest rate of 4.37% and a $19.1 million real estate loan that matures in ten years with a fixed interest rate of 4.02%. Both the term financing and the working capital line are being financed by GE Capital. For the fiscal year ending May 27, 2012, Landec will record approximately $800,000 of acquisition related expenses. In addition, the Company will record approximately $1.0 million of loan origination fees which will be amortized over approximately seven years. The Company is forecasting that GreenLine's operating results for the period from the close of the acquisition to our fiscal year end of May 27, 2012 will offset a majority of the acquisition related expenses. For fiscal year 2012, as a result of including GreenLine operating results for the last five weeks, we are increasing our revenue guidance and maintaining our net income guidance. For fiscal year 2012, we now expect revenues to grow more than 10% compared to our previous guidance for revenues to grow 9% to 10% and we are maintaining our guidance for net income to grow approximately 40% compared to fiscal year 2011, after adding back the one-time impairment charge of $4.8 million to net income for fiscal year 2011.