THE WOODLANDS, TEXAS — RiceBran Technologies on Nov. 5 exercised its option to acquire the assets and operations of Golden Ridge Rice Mills’ milling facility in Wynne, Ark. Total consideration of the transaction is expected to be approximately $7 million to $8 million, with newly issued shares of RBT accounting for slightly more than half of the transaction and the assumption of debt for the remainder.

“We believe we are paying a mid-single digit multiple of enterprise value to EBITDA based on our current expectations for Golden Ridge’s operations,” RiceBran said. “We estimate that Golden Ridge’s operations will add approximately $20 million in sales as well as meaningful EBITDA in 2019 with significant room for expansion of stabilized rice bran (S.R.B.) production. We expect this mill to be an important component of our S.R.B. supply in the Arkansas region while providing us with a platform to develop new products derived from S.R.B. to expand our growth opportunities.”

RiceBran entered into an S.R.B. supply agreement with Golden Ridge Rice Mills in July. The three-year supply agreement calls for Golden Ridge to supply RiceBran with (and RiceBran to purchase) at least 9.6 million lbs of S.R.B. annually, which would represent a 32% increase in the company’s S.R.B. supply when compared to the total 2017 S.R.B. production volume.

As part of the supply agreement, RiceBran secured a six-month option to purchase Golden Ridge’s milling assets. Now that RiceBran has exercised that option, the company will have 120 days from the exercise date to complete the purchase of the milling business assets.

Brent Rystrom, chief operating officer and chief financial officer, in July said the potential acquisition of Golden Ridge’s rice milling operation would give RiceBran a permanent physical presence to locate additional product and production capabilities.

 “We believe owning and operating mills will become an important part of our operating model going forward in addition to maintaining and building our partnerships with non-owned mills,” he said.

News of the Golden Ridge mill acquisition came the same day RiceBran issued third-quarter financial results.

RiceBran sustained a loss of $1,627,000 in the third quarter ended Sept. 30, which compared with income of $3,299,000, equal to 30c per share on the common stock, in the same period a year ago. Net sales were virtually unchanged, increasing to $3,463,000 from $3,445,000. RiceBran said growth has been constrained by the lingering effects of supply chain disruptions at its facility in Mermantau, La.

 “Third-quarter adjusted EBITDA showed improvement compared to second quarter 2018, as our Mermentau, La., facility restarted production during the quarter, helping to reduce the higher freight costs associated with shipping from our California facilities,” RiceBran said. “Gross margins continued to be negatively impacted by higher freight costs, reduced production at our Dillon, Mont., facility due to a large capital expenditures project related to attaining plant certification that is expected to be completed late in the fourth quarter of this year, as well as an approximately 18% increase in raw bran prices.”

RiceBran said it now expects 2018 annual revenue to range from $14.5 million to $15.5 million, up from previous guidance of $14 million to $15 million.