Village Farms Income Fund Announces Unitholder Meeting for Conversion from an
Income Trust Structure to a Corporation and its Third Quarter 2009 Results

    TRADING SYMBOL: The Toronto Stock Exchange:
                    Village Farms Income Fund - VFF.UN

VANCOUVER, Nov. 3 /CNW/ - Village Farms Income Fund (the "Fund") (TSX: VFF.UN) announced today that its board of trustees has approved the proposed conversion from an income trust structure to a public corporation (the "Conversion").

The Conversion is expected to be completed on or around December 31, 2009 and is subject to the approval of the unitholders of record of the Fund, to be obtained at a special meeting of the unitholders to be held on December 9, 2009 and will be completed pursuant to a plan of arrangement under Section 192 of the Canadian Business Corporations Act ("CBCA").

In conjunction with their review of the Conversion, the board of trustees retained RSM Richter, Inc. ("RSM Richter") to act as its financial advisor. RSM Richter has provided the board of trustees with an opinion that, as at the date thereof and subject to the particular assumptions and considerations summarized therein, the consideration to be received by unitholders pursuant to the Conversion is fair, from a financial point of view, to such unitholders. The full text of the RSM Richter fairness opinion will be included with the management information circular.

    Rationale and Benefits of the Conversion

    -   Greater access to equity capital markets and widening of potential
        investor base in light of the pending limited life of the public
        income trust market;
    -   Enhanced structure to pursue opportunities for growth and expansion;
    -   Simplified capital structure;
    -   Effective and efficient method of converting from an income trust to
        a corporation under existing legislation.

Details of the Conversion

As a result of the Conversion, ordinary unitholders of the Fund will receive one common share for every ordinary trust Unit ("Unit") of the Fund held on the effective date of the Conversion. The Conversion entity, Village Farm of Canada, Inc. ("VF Canada"), is an existing wholly owned subsidiary of the Fund, which intends to change its name to Village Farms International, Inc. in connection with the Conversion. The existing participating preferred shares of VF U.S. Holdings outstanding at the time of the Conversion will become exchangeable for common shares, instead of units, resulting in no change in ownership upon completion of the Conversion. The majority holders of the Participating Preferred Shares have indicated they will vote their 45% of the total unitholder votes in favor of the Conversion.

Following the Conversion, the board of directors and executive officers of VF Canada will be comprised of the existing members of the VF Canada board and the existing executive officers of the Fund and its operating subsidiaries.

Village Farms anticipates that 13,440,435 shares of VF Canada will be outstanding, which is the same figure as the current outstanding Units, with the Participating Preferred shareholders having the rights to exchange their shares for an additional 25,267,000 shares. Accordingly, on a fully-diluted basis, VF Canada would have 38,707,345 shares, which is the same figure as the Fund's current fully diluted Units.

The Conversion is subject to the customary commercial conditions, including the receipt of regulatory approvals such as the Toronto Stock Exchange. As a result of being an arrangement with a corporation governed by the CBCA, it is also subject to the approval of the Ontario Superior Court of Justice, as well as the approvals of not less than 66 2/3% of the votes cast at the meeting of the Fund's unitholders to be held on December 9, 2009. The mailing of the information circular to the unitholders of record on November 9, 2009 is expected to be completed by November 16, 2009.

At the meeting, unitholders will also be asked to consider a resolution to implement a Stock Compensation Plan for VF Canada, which will be further described in the information circular.

    Third Quarter 2009 Operating Results Summary:

    -   Revenues of US$32.7 million versus third quarter 2008 sales of
        US$ 30.1 million;
    -   EBITDA of US$(292) thousand versus US$679 thousand in the third
        quarter 2008;
    -   Net loss of US$(2.8) million versus a $(1.7) million loss in the
        third quarter 2008;

Michael DeGiglio, Chief Executive Officer of the Fund's operating subsidiaries, stated, "We continued to face market challenges through the summer of 2009 which is historically the weakest pricing period for our products during the course of a calendar year and this year was no exception. The market challenges came from decreased consumer consumption for fresh produce as compared to 2008 and increased supply of competitive products as well as some competitors facing serious financial distress. As a result we saw a year on year decrease in our average selling price of 14.7%. During the later part of the third quarter we did experience better market pricing than we did during the same period in 2008, so we are hopeful that our fourth quarter results will be more in line with our prior year fourth quarter performance rather than the first three quarters of calendar year 2009, in which we have experienced some of the weakest pricing in the last five years.

DeGiglio added, "We continue to believe that 2009 will remain a challenging year, we are steadfast on improving our results in 2010 as a result of more efficient operations, marketing and customer mix as well as enhanced production. We remain committed to creating long term value for our unitholders through a disciplined operational and strategic approach to our business. The Conversion is an integral part of executing our growth strategy and will enhance our growth opportunities in the future."

Operational Summary for the Quarter:


Revenue for the quarter ended September 30, 2009 increased $2,606 or 9%, to $32,711 from $30,105 for the quarter ended September 30, 2008. The increase in revenue is due to an increase in third party produce of $4,485 over the same period in 2008. Revenues from our own production were down $1,879 for the comparable period in 2008 due to lower pricing in 2009 versus 2008. The comparable period pricing for the Fund's products was 15% lower in 2009 versus 2008.

Gross Profit

Gross profit for the quarter ended September 30, 2009 decreased $1,788 or 66%, to $935 from $2,723 for the quarter ended September 30, 2008. The decrease in gross profit is directly due to lower pricing and higher volume of third party produce. Cost of goods for the Fund's production was 5% lower than the Fund's 2008 production cost of goods.

Selling, General and Administrative

Selling, general and administrative expenses for the quarter ended September 30, 2009 decreased $691 or 21% to $2,675 from $3,366 for the quarter ended September 30, 2008. The decrease is primarily due to lower personnel and credit costs in the third quarter of 2009 as compared to the same period in 2008.

Interest, Net

Net Interest expense, for the quarter ended September 30, 2009 decreased $76 to $817 from $893 for the quarter ended September 30, 2008. The decrease is due to the continued reduction in debt levels throughout 2009 and 2008.

Other Costs

Other costs for the quarter ended September 30, 2009 increased $377 to $1,288 from other costs of $911 for the quarter ended September 30, 2008. The increase was due to a larger non-cash charge for foreign exchange loss of $829 as compared to $194 for the third quarter of 2008. The increased loss was directly due to the volatility in the US/CA exchange rate as a significant portion of the Fund's transactions are denominated in CA dollars, while the common/reporting currency is US dollars.

Net (Loss)

Net (loss) for the quarter ended September 30, 2009 increased ($1,073) to a loss of ($2,777) from a net loss of ($1,704) for the quarter ended September 30, 2008. The increased loss was due to a decrease in gross profit caused by lower pricing.


EDITDA for the quarter ended September 30, 2009 decreased $(971) to $(292) from $679 for the quarter ended September 30, 2008 primarily due to a lower gross profit as result of lower product pricing.

Distributions to Unitholders

The Fund's policy has been to distribute annually to Unitholders available cash provided by operations after cash required for capital expenditures, working capital reserves, growth capital reserves and other reserves considered advisable by the Trustees of the Fund. In light of the ongoing uncertainties and challenging economic times, as well as to create a reserve for the cost of converting the Fund's Income Trust structure by the end of calendar year 2009 into a regular public Canadian corporation and our intent to accelerate our growth initiatives, the Trustees believe it is prudent to conserve cash for these reasons and as such suspended monthly distributions beginning in June 2009.

Non-GAAP Measures

EBITDA is not a recognized measure and does not have standardized meaning under the Canadian generally accepted accounting principles. Accordingly, this measure may not be comparable to similar measures presented by other issuers. Please refer to the Fund's Management's Discussion and Analysis for the quarter ended September 30, 2009, which will be available at, for additional information concerning EBITDA and a reconciliation of it to net earnings and operating cash flows, for the periods presented.

About Village Farms

Village Farms is one of the largest producer, marketer and distributor of premium-quality, greenhouse grown tomatoes, bell peppers, and cucumbers in North America. This premium product as well as premium product produced under exclusive arrangements with other greenhouse producers is grown in sophisticated, highly efficient and intensive agricultural greenhouse facilities located in British Columbia and Texas. Product is marketed and distributed under the Village Farms(R) brand primarily to retail grocers and dedicated fresh food distributors throughout the United States, Canada and Japan. Village Farms currently operates distribution centers located in key markets in the United States and Canada. Since its inception, Village Farms has been guided by sustainable agricultural principles which integrate three main goals; environmental health, economic profitability, and social & economic equality.

Forward Looking Statements

This press release contains certain "forward looking statements". These statements relate to future events or future performance and reflect our expectations regarding our growth, results of operations, performance, business prospects, opportunities or industry performance and trends. These forward looking statements reflect our current internal projections, expectations or beliefs and are based on information currently available to us. In some cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. A number of factors could cause actual events or results to differ materially from the results discussed in the forward looking statements. In evaluating these statements, you should specifically consider various factors, including, but not limited to, such risks and uncertainties as availability of resource, competitive pressures and changes in market activity, risks associated with U.S. and international sales and foreign exchange, regulatory requirements and all of the other "Risk Factors" set out in the Fund's current quarterly information form and management's discussion and analysis for the quarter September 30, 2009, which is available electronically at Actual results may differ materially from any forward looking statement. Although we believe that the forward looking statements contained in this press release are based upon reasonable assumptions, you cannot be assured that actual results will be consistent with these forward looking statements. These forward looking statements are made as of the date of this press release, and other than as specifically required by applicable law, we assume no obligation to update or revise them to reflect new events or circumstances.

                          Village Farms Income Fund
                         Consolidated Balance Sheets
                   (In thousands of United States dollars)

                                                   September 30, December 31,
                                                           2009         2008
                                                   ------------- ------------
    Assets                                           (unaudited)

    Current assets:
      Cash and cash equivalents                          $2,725       $4,101
      Accounts receivable                                 7,958        9,357
      Assets held for sale                                    -          344
      Inventories                                        11,867       11,438
      Other receivables                                     694          567
      Prepaids and deposits                                 240          544
                                                   ------------- ------------
                                                         23,484       26,351

    Property, plant and equipment                        67,543       70,489
    Intangible assets                                     1,430        1,508
    Other assets                                            945          821
                                                   ------------- ------------
      Total assets                                      $93,402      $99,169
                                                   ------------- ------------
                                                   ------------- ------------

    Liabilities and unitholders' equity

    Current liabilities:
      Accounts payable and accrued liabilities           $8,637       $9,388
      Operating line of credit                            1,691            -
      Current portion of long-term debt                   3,227        3,227
      Current portion of obligations under capital
       leases                                               272          227
      Distributions payable                                   -          317
                                                   ------------- ------------
        Total current liabilities                        13,827       13,159

      Long-term debt                                     52,311       54,732
      Derivatives                                         2,366        2,801
      Obligations under capital leases                      330          472
      Future income taxes                                 5,186        4,881
                                                   ------------- ------------
        Total liabilities                                74,020       76,045
                                                   ------------- ------------

    Unitholders' equity:

      Trust units                                        24,850       24,850
      Accumulated distributions                          (9,400)      (8,168)
      Accumulated earnings                                3,877        6,387
      Cumulative translation adjustment                      55           55
                                                   ------------- ------------
        Total unitholders' equity                        19,382       23,124
                                                   ------------- ------------
        Total liabilities and unitholders' equity       $93,402      $99,169
                                                   ------------- ------------
                                                   ------------- ------------

                          Village Farms Income Fund
       Consolidated Statements of Earnings and Comprehensive Earnings
                     For the Three and Nine Months Ended
        (In thousands of United States dollars, except for units outstanding
                   and per unit/share amounts, unaudited)

                              Three Months Ended         Nine Months Ended
                                 September 30,             September 30,
                               2009         2008         2009         2008
                           -----------  -----------  -----------  -----------
                           (unaudited)  (unaudited)  (unaudited)  (unaudited)

    Net sales                 $32,711      $30,105      $96,927     $102,677
    Cost of sales              31,776       27,382       89,568       82,777
                           -----------  -----------  -----------  -----------
    Gross profit                  935        2,723        7,359       19,900

    Selling, general and
     expenses                   2,675        3,366        8,489       10,585
                           -----------  -----------  -----------  -----------
    (Loss) income from
     Operations                (1,740)        (643)      (1,130)       9,315

    Interest expense, net         817          893        2,419        2,770
    Foreign exchange loss         829          194          409          206
    Amortization of
     intangible assets             26          341           78        1,047
    Loss (gain) on
     derivatives                  485          379         (435)        (427)
    Other (income), net           (52)          (3)        (234)      (1,059)
    Gain on sale of asset           -            -          (37)           -
                           -----------  -----------  -----------  -----------
    Loss/earnings before
     income taxes              (3,845)      (2,447)      (3,330)       6,778

    (Recovery of) provision
     for income taxes          (1,068)        (743)        (820)       1,147
                           -----------  -----------  -----------  -----------

    Net (loss) earnings
     and comprehensive
     (loss) earnings           (2,777)      (1,704)      (2,510)       5,631
                           -----------  -----------  -----------  -----------

    Net (loss) income per
     Unit/share-basic          ($0.07)      ($0.05)      ($0.06)       $0.15
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------
    Weighted average number
     of units/shares
     outstanding-basic     38,707,345   36,349,305   38,707,345   36,349,305
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------

    Net (loss) income per
     Unit/share-diluted        ($0.07)      ($0.04)      ($0.06)       $0.15
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------
    Weighted average
     number of
     outstanding-diluted   38,707,345   38,707,345   38,707,345   38,707,345
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------

                          Village Farms Income Fund
                    Consolidated Statements of Cash Flows
                     For the Three and Nine Months Ended
             (In thousands of United States dollars, unaudited)

                              Three Months Ended         Nine Months Ended
                                 September 30,             September 30,
                               2009         2008         2009         2008
                           -----------  -----------  -----------  -----------
                           (unaudited)  (unaudited)  (unaudited)  (unaudited)
    Cash flows from
     operating activities:
      Net earnings            ($2,777)     ($1,704)     ($2,510)      $5,634
      Adjustments to
       reconcile net
       earnings to net
       cash provided by
       operating activities:
        Depreciation and
         amortization           1,422        1,660        4,333        5,028
        Loss (gain) on sale
         of property                -           50          (42)          50
        Loss (gain) on
         derivatives              485          379         (435)        (428)
        Foreign exchange
         loss (gain)               44            -           77            -
        Share based
         compensation               -            -            -          813
        Future income taxes      (139)          (5)         305          164
        Changes in non-cash
         working capital        5,216        7,300          622        2,756
                           -----------  -----------  -----------  -----------
          Net cash provided
           by operating
           activities           4,251        7,680        2,350       14,017
                           -----------  -----------  -----------  -----------

    Cash flows from
     investing activities:
      Purchases of property,
       plant and equipment       (410)      (1,659)      (1,423)      (2,706)
      Proceeds from sale of
       property, plant and
       equipment                  140            -          222            -
                           -----------  -----------  -----------  -----------
          Net cash used in
           activities            (270)      (1,659)      (1,201)      (2,706)
                           -----------  -----------  -----------  -----------

    Cash flows from financing
      Proceeds (Payments on)
       from operating line of
       credit                  (3,865)      (5,031)       1,691       (3,313)
      Payments on long-term
       debt                      (807)        (795)      (2,421)      (2,358)
      Payments on obligations
       under capital leases       (13)         (92)         (97)        (261)
      Dividend payments to
       Unitholders and PPS
       holders                      -       (1,047)      (1,550)      (3,221)
      Other                        53            -          (71)        (529)
                           -----------  -----------  -----------  -----------
          Net cash used in
           activities          (4,632)      (6,965)      (2,448)      (9,682)
                           -----------  -----------  -----------  -----------

      Foreign exchange loss       (44)           -          (77)           -
                           -----------  -----------  -----------  -----------

    Net increase (decrease)
     in cash and cash
     equivalents                 (695)        (944)      (1,376)       1,629
    Cash and cash equivalents
     beginning of period        3,420        4,193        4,101        1,620
                           -----------  -----------  -----------  -----------
    Cash and cash equivalents
     end of period             $2,725       $3,249       $2,725       $3,249
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------

    Supplemental cash flow
      Interest paid              $831       $1,321       $2,363       $3,050
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------
      Income taxes paid            $1          $16          $24       $1,965
                           -----------  -----------  -----------  -----------
                           -----------  -----------  -----------  -----------

%SEDAR: 00020068E


For further information: For further information: Stephen C. Ruffini, Senior Vice President and Chief Financial Officer, Village Farms Canada Limited Partnership, (732) 676-3008

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