Canadian grain handler, Viterra Inc Tuesday announced it is keen on making more acquisitions in Australia even as it still seeks the purchase of Australia’s grain handler, ABB Grain Ltd. According to the Canadian firm, it will be considering more acquisitions and would mull over increasing its debt levels if that will enable it undertake its investments plan. As such, Viterra Inc. said it is willing to raise its overall debt to capital ratio by about 30% to 40%, way up from its 25% as of 31st January.

Mayo Schmidt, Viterra Inc chief executive reiterated the company’s plans for increased investment and said capital funding may be sought from a debt increase if the company had to. Back in May, the Canadian grain handler bought Australia’s ABB Grain Ltd for an estimated A$1.6 billion, in a move it said was aimed at increasing its supplies, given the fact that the Australian firm, ABB Grain Ltd is the world’s second biggest exporter of barley and the fourth largest exporter of wheat.

Before the Australian investment move, the Canadian firm had acquired its rival back home, Agricore United in 2007 June for an estimated 1.76 billion Canadian dollars. The company said the investments and the planned additional acquisitions are targeted at the expected growth in food demand in the coming 10 years, with an expected 20% hike in demand for food, and as such; Viterra Inc. will be seeking additional global investments to bolster its business.

Over the financial year ended 31st October, the Canadian firm spent about 100 million US dollars on minor acquisitions to bolster its operations. In 2009, Viterra Inc. raised 441.4 million US dollars for financing its acquisitions through the sale of its 32.89 million shares.

It further generated an additional 450 million US dollars this year May through the sale of its subscription receipts. The subscription receipts offer their holders the right to get one common Viterra share on completion of the ABB deal.

However, the Canadian firm’s chief executive said the company has greatly benefited from its underleveraged balance sheet as it gives it easier access to capital and as such, the company can easily avail the needed capital by going into debt funding for its investments.  The Canadian firm is keen on expanding its business in Australia, the U.S and Western Europe, with its core interest being assets such as oat and wheat milling, oilseed crushing and livestock feed manufacturing.

28 July 2010.