The Andersons to pay debt, invest in core units after rail business sale

Andersons

17/08/2021 17:14

By Karl Plume
    CHICAGO, Aug 17 (Reuters) - U.S. grain handler The Andersons
 ANDE.O  plans to use $550 million from the sale of its rail
leasing business to pay down debt and invest in sustainable
farming and low carbon initiatives in its core grain and
fertilizer units, Chief Executive Pat Bowe told Reuters on
Tuesday.
    Maumee, Ohio-based Andersons sold its rail leasing business
this week to American Industrial Transport Inc. It also aims to
sell its railcar repair business within the next year, Bowe
said.  urn:newsml:reuters.com:*:nASA02JEZ
    The divestments represent a shift in focus at the
74-year-old company, which was looking to expand its rail
business as recently as five years ago as grain trading profits
slumped.
    Grain trading profits have since rebounded as agribusinesses
capitalized on supply chain disruptions during the U.S.-China
trade war and the coronavirus pandemic. The Andersons' larger
rivals, including Archer Daniels Midland  ADM.N  and Cargill
 CARG.UL , have seen earnings surge this year.
    "We're committed to the ag side of our business. ... We feel
we can make higher returns for our shareholders in those spaces
than we were in rail," Bowe said in an interview with Reuters.
    The company will pay down debt, which swelled with its 2018
acquisition of U.S. grain handler Lansing Trade Group.
    "We want to get to our normalized 2.5-times debt to adjusted
EBITDA ratio. We were on our way to achieve that. Now we'll
achieve it sooner," Bowe said.
    The Andersons is also eyeing investments to grow its
renewable fuels and specialty food businesses and to capitalize
on growing trends such as sustainable farming, agricultural
carbon trading and plant-based protein, he said.
    "We're not going to buy a beef slaughter facility or a
soybean crush plant. ... It's about everything in the middle."
    Initial moves include supplying more agricultural oils to
renewable diesel producers, including The Andersons' ethanol
venture partner Marathon Petroleum Corp  MPC.N , Bowe said.
    Other investments will focus on organic fertilizers and
plant nutrient products that help crops sequester more carbon in
soils, he said.

 (Reporting by Karl Plume in Chicago; editing by Jonathan Oatis)
 ((karl.plume@thomsonreuters.com; +1 313 484 5285; Reuters
Messaging: karl.plume.thomsonreuters.com@reuters.net))