REDEEMABLE NONCONTROLLING INTEREST IN NUTRA SA | 3 Months Ended |
Mar. 31, 2015 |
REDEEMABLE NONCONTROLLING INTEREST IN NUTRA SA [Abstract] | |
REDEEMABLE NONCONTROLLING INTEREST IN NUTRA SA | NOTE 6. REDEEMABLE NONCONTROLLING INTEREST IN NUTRA SA |
|
We hold a variable interest which relates to our equity interest in Nutra SA, LLC (Nutra SA). We are the primary beneficiary of Nutra SA, and as such, Nutra SA’s assets, liabilities and results of operations are included in our consolidated financial statements. The other equity holders’ interests are reflected in net loss attributable to noncontrolling interest in Nutra SA, in the consolidated statements of operations, and redeemable noncontrolling interest in Nutra SA, in the consolidated balance sheets. Our variable interest in Nutra SA is our Brazil segment. A summary of the carrying amounts of Nutra SA balances included in our consolidated balance sheets follows (in thousands). |
|
| | March 31, | | | December 31, | |
2015 | 2014 |
Cash and cash equivalents | | $ | 37 | | | $ | 269 | |
Other current assets (restricted $1,727 and $1,980) | | | 4,286 | | | | 4,735 | |
Property, net (restricted $2,945 and $3,727) | | | 12,085 | | | | 15,258 | |
Goodwill and intangibles, net | | | 3,006 | | | | 3,722 | |
Other noncurrent assets | | | 29 | | | | 34 | |
Total assets | | $ | 19,443 | | | $ | 24,018 | |
| | | | | | | | |
Current liabilities | | $ | 5,637 | | | $ | 5,346 | |
Current portion of long-term debt (nonrecourse) | | | 3,877 | | | | 4,758 | |
Long-term debt, less current portion (nonrecourse) | | | 5,022 | | | | 6,203 | |
Total liabilities | | $ | 14,536 | | | $ | 16,307 | |
|
Nutra SA’s debt is secured by its accounts receivable and property. The non-Brazilian entities in our consolidated group do not guarantee any of Nutra SA’s debt. |
|
A summary of changes in redeemable noncontrolling interest in Nutra SA follows for the three months ended March 31, 2015 and 2014 (in thousands). |
|
| | 2015 | | | 2014 | |
Redeemable noncontrolling interest in Nutra SA, beginning of period | | $ | 2,643 | | | $ | 7,177 | |
Investors' interest in net loss of Nutra SA | | | (644 | ) | | | (920 | ) |
Investors' interest in other comprehensive loss of Nutra SA | | | (481 | ) | | | 168 | |
Accumulated Yield classified as other current liability | | | (142 | ) | | | - | |
Redeemable noncontrolling interest in Nutra SA, end of period | | $ | 1,376 | | | $ | 6,425 | |
| | | | | | | | |
Investors' average interest in Nutra SA | | | 34.2 | % | | | 45.2 | % |
|
In December 2010, we entered into a membership interest purchase agreement (MIPA) with AF Bran Holdings-NL LLC and AF Bran Holdings LLC (Investors). As of March 31, 2015 and December 31, 2014, the Investors interest was 33.9% and 34.7%. In the three months ended March 31, 2015, we invested an additional $1.1 million in Nutra SA. We invested an additional $0.2 million in Nutra SA between April 1, 2015, and May 13, 2015. The Investors’ share of Nutra SA’s net income (loss) increases (decreases) redeemable noncontrolling interest. We are restricted from competing with Nutra SA and Irgovel in Brazil as further described in the MIPA. |
|
Redeemable noncontrolling interest in Nutra SA is recorded in temporary equity, above the equity section and after liabilities on our consolidated balance sheets, because the Investors have drag along rights which provide the Investors the ability to force a sale of Nutra SA assets in the future. We have assessed the likelihood of the Investors exercising these rights as less than probable at March 31, 2015. We will continue to evaluate the probability of the Investors exercising their drag along rights each reporting period. We will begin to accrete the redeemable noncontrolling interest up to fair value if and when it is probable the Investors will exercise these rights. |
|
Under the limited liability company agreement for Nutra SA (LLC agreement), as amended, any units held by the Investors beginning January 1, 2014, accrue a yield at 4% (Yield). Commencing with the first quarter of 2014, Nutra SA must make distributions to the Investors quarterly in the amount equal to the previously accrued and unpaid Yield plus any additional distributions owed to the Investors, to the extent there is distributable cash, as defined in the LLC agreement. As of March 31, 2015, our balance sheet includes an other liability of $0.7 million for Yield accumulated and unpaid. Nutra SA has made no Yield payments. |
|
Following the payment of the Yield, Nutra SA must distribute all distributable cash (as defined in the LLC Agreement) to the members on March 31 of each year as follows: (i) first, to the Investors in an amount equal to 2.3 times the Investors’ capital contributions, less the aggregate amount of non-Yield distributions paid to the Investors, (ii) second, to us in an amount equal to twice the capital contributions made by us, less the aggregate amount of distributions paid to us; and (iii) third, to us and the Investors in proportion to our respective membership interests. |
|
Under the LLC agreement, the business of Nutra SA is to be conducted by the manager, currently our CEO, subject to the oversight of the management committee. The management committee is comprised of three of our representatives and two Investor representatives. Upon an event of default or a qualifying event, we will no longer control the management committee and the management committee will include three Investor representatives and two of our representatives. In addition, following an event of default or a qualifying event, a majority of the members of the management committee may replace the manager of Nutra SA. |
|
As of March 31, 2015, there have been no unwaived events of default. Events of default, as defined in the MIPA and the October 2013 amendment of investment agreements, are failure of Irgovel to meet minimum annual processing targets or to achieve EBITDA of at least $4.0 million in any year beginning in 2015. |
|
As of March 31, 2015, there have been no qualifying events. The LLC agreement defines a qualifying event as any event prior to September 16, 2014, which results, or will result, in (i) a person or group of persons exercising the right to appoint members to our board of directors holding one third or more of the votes of all board members, (ii) the sale, exchange, pledge or use as guarantee of one half or more of our ownership interest in Nutra SA to a third party or (iii) the bankruptcy of RiceBran Technologies or Nutra SA. |
|
The Investors have drag along rights, the right to force the sale of all Nutra SA assets after January 1, 2016. The right terminates upon the occurrence of certain events (a $50 million Nutra SA initial public offering or a change of control, as defined). We may elect to exercise a right of first refusal to purchase the Investors’ interest instead of proceeding to a sale. |
|
In evaluating whether we are the primary beneficiary of Nutra SA, we considered the matters which could be put to a vote of the members. Until there is an event of default or a qualifying event, the Investors’ rights and abilities, individually or in the aggregate, do not allow them to substantively participate in the operations of Nutra SA. The Investors do not currently have the ability to dissolve Nutra SA or otherwise force the sale of all its assets. They do have drag along rights in the future. We will continue to evaluate our ability to control Nutra SA each reporting period. |
|
Cash provided by operations in our Brazil segment is generally unavailable for distribution to our Corporate and USA segments pursuant to the terms of the LLC agreement. |