World Grain - April 2008 - 10

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Hedge fund acquiring ConAgra trading unit,
grain storage and handling assets
NEW YORK, NEW YORK, U.S. - Ospraie
Management L.L.C., a New York-based investment management firm, and ConAgra Foods,
Inc., have reached an agreement under which an
investor group led by Ospraie Special Opportunities Fund will acquire for about $2.1 billion
the trading and merchandising operation conducted by the ConAgra's Trade Group. Included will be the unit's
grain storage and handling assets.
The Trade Group will be renamed Gavilon L.L.C. upon completion of the sale. Ospraie Management, established in 1999, currently
has $9 billion under management in investments focused solely on
commodities and basic industries. Greg Heckman, president of the
ConAgra Foods commercial businesses, will become chief executive
officer of Gavilon upon closing.
For Omaha, Nebraska, U.S.-based ConAgra, the transaction represents a major infusion of cash, which the company said would be
used principally for share repurchase (the purchase price equates to
about 20% of the company's March 26 market value). Additionally,
the sale will increase ConAgra's focus on the packaged foods business and away from its heritage grain trading and milling business.
The company's milling operations, one of the largest in the United
States, are not included in the transaction.

According to ConAgra, Gavilon will remain
in its current Omaha offices after the transaction closes and will retain "virtually all of the
approximately 950 employees of ConAgra
Trade Group."
The agreement includes 144 facilities, located principally in North America. According to
the 2008 Grain and Milling Annual published by Milling & Baking
News (sister magazine to World Grain), the Peavey Grain business
of ConAgra is the sixth largest grain company in the United States.
ConAgra owns additional grain storage capacity through its flour
milling business. Assets in the Peavey unit, to be sold as part of the
transaction, include 64 grain elevators with grain storage capacity
totaling 121,564,000 bushels.
"We are excited to acquire this dynamic business and look forward to working with Gavilon's talented team to build on the success of its agricultural, energy and fertilizer commodities distribution, merchandising and trading," said John Duryea, portfolio manager of the Ospraie Special Opportunities fund. "As a stand-alone
entity, Gavilon will continue to provide its clients with the most
innovative solutions. Through enhanced resource allocation and
by pursuing incremental opportunities, Ospraie intends to further
grow the business."

Viterra's first quarter net income rises sharply
WINNIPEG, MANITOBA, CANADA - Viterra, the expanded and
rebranded Saskatchewan Wheat Pool, posted net earnings of C$41.2
million for the first quarter ended Jan. 31, up 422% from C$7.9 million for the same period last year.
The company reported sales of C$1.3 billion, up C$869.5 million from C$447.6 million, boosted by strong commodity prices
and an expanded network stemming from its takeover of Agricore
United.
"As we mark the beginning of our first fiscal year as a combined

company, we've been able to optimize the returns
available in today's robust commodity markets
and deliver strong results this quarter," Mayo
Schmidt, chief executive officer, said. "The opportunities that biofuels and China and India
have presented to us are just staggering."
Viterra expanded its total handling capacity
from 1.1 million tonnes to 1.9 million tonnes when
it acquired Agricore, an increase of about 66%.

Schmidt

Egypt's wheat production stable
WASHINGTON, D.C., U.S. - A recent U.S. Department of Agriculture (USDA) Foreign Agriculture Service (FAS) report indicated that Egypt's wheat area and production remain relatively
stable and output is projected at just under 8.3 million tonnes in
2008-09. For the 2008-09 crop, Egypt announced a purchase price
of $460 per tonne. The country is hoping to purchase 3 million
tonnes this marketing year. By comparison, the current price for
Russian wheat is about $432 per tonne, compared to $218 per
tonne during February 2007.
The total quantity of locally produced wheat sold to the Ministry
10

of Industry and Foreign Trade (GASC) in 2007-08 is estimated to be
1.7 million tonnes, compared to 2.7 million tonnes in 2006-07. This
drop in purchasing quantity is due to the higher price offered to farmers by the private sector. The private sector offered more per tonne
than GASC. FAS said most observers are skeptical that GASC will
achieve its target due to expected higher prices that will be offered
by the private sector.
FAS said Egypt's per capita consumption of wheat in 2007-08 is expected to reach 198 kilograms. To keep pace with population growth,
a slight increase in total consumption is forecast for 2008-09.
April 2008 / World Grain / www.World-Grain.com

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World Grain - April 2008

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