Agricore Secures Financing

WINNIPEG Sep 6/06 - SNS -- Agricore United obtained a senior secured institutional term loan ("Term B Loan") for US$138 million, repayable in quarterly installments of US$345,000 with the balance at maturity in September 2013 or in full at any time before maturity without premium. Scotia Capital acted as the lead arranger for the Term B Loan.

Proceeds of US$50 million will be applied to repay a bridge loan used by the company's wholly-owned U.S. subsidiaries, Agricore United Holdings Inc. and Unifeed Hi-Pro Inc., for the acquisition of Hi-Pro Feeds completed on August 14, 2006.

The balance of US$88 million, swapped into Canadian funds, will be used to repay the company's existing Syndicated Term Loan of C$83 million maturing November 30, 2007 and for general corporate purposes.

The new Term B Loan carries a floating interest rate of US LIBOR plus 1.75% (or currently about 7.25%), while the company's existing Syndicated Term Loan facility carried a fixed rate of 9.65%.

The Term B Loan will rank pari passu with the company's remaining Term Notes, Series A Notes and Series B Notes, secured by specific charges over material fixed assets and a floating charge over all other assets of the company and its material wholly-owned subsidiaries.

In connection with the refinancing, the company terminated an interest rate swap on the Syndicated Term Loan resulting in a loss on settlement of C$2.2 million. The company purchased a new interest rate swap of US$50 million with a Schedule I bank to fix the interest rate on a portion of the new Term B Loan's floating rate.

Concurrent with the Term B Loan, the company also arranged for a three-year Revolving Facility with its existing syndicate of banks to replace a 364-day Revolving Facility maturing on February 26, 2007.

The new Revolving Facility matures on November 30, 2009, increases the seasonal limit between January 1 and May 31 from C$475 million to C$525 million and reduces the carrying cost to between prime and prime plus 0.9% (depending on the company's fixed charge ratio). The security for this facility is consistent with the security pledged on the existing Revolving Facility and the terms of this facility have been harmonized with the company's term debt.