PICO Holdings To Sell Substantially All Assets Of PICO Northstar Hallock

(RTTNews) - PICO Holdings, Inc. (PICO) said Monday that it has signed an agreement to sell substantially all of the assets of its majority owned canola processing subsidiary, PICO Northstar Hallock, LLC, to CHS Inc., a farmer-owned cooperative and a global energy, grains and foods company.

The deal is expected to close during the third quarter of 2015.

Under the deal, CHS Inc. will acquire the PICO Northstar assets for $127 million, to be reduced by an estimated target working capital adjustment. After the estimated target working capital adjustment, and repayment of about $75 million in debt associated with PICO Northstar's assets, the sale will net PICO Northstar estimated cash of $30 million, before deal related costs. Of the estimated $30 million, a total of $6 million will be deposited in escrow for general indemnification obligations and $4.2 million will be deposited in escrow for specified operational matters. PICO Holdings will also provide an $8 million guarantee for any indemnification claims in excess of the $6 million escrow.

PICO Northstar, doing business as Northstar Agri Industries, started operations in 2012 and is the first operational canola processing plant with an integrated refinery in Minnesota. It is anticipated that all of the PICO Northstar plant employees will be retained by CHS Inc.

With the closing of the sale, PICO Holdings will exit its canola processing business.