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United Grain Growers Limited The ADM Alternative Presented by: Kelsey Kitsch, Hilary Thompson Kianoush Khaleghpour Lesli

United Grain Growers Limited The ADM Alternative Presented by: Kelsey Kitsch, Hilary Thompson Kianoush Khaleghpour Leslie Mitchner Marcel Guay Manoj Mehta. ADM. One of the world’s leading international agribusiness companies with a global network of subsidiaries & affiliates

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United Grain Growers Limited The ADM Alternative Presented by: Kelsey Kitsch, Hilary Thompson Kianoush Khaleghpour Lesli

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  1. United Grain Growers LimitedThe ADM AlternativePresented by:Kelsey Kitsch,Hilary ThompsonKianoush KhaleghpourLeslie MitchnerMarcel GuayManoj Mehta

  2. ADM • One of the world’s leading international agribusiness companies with a global network of subsidiaries & affiliates • Operating in 43 countries on 4 continents • Operations: procure & process grain, oilseed, and other agricultural products. • Significant presence in Canada • 80% of Canada’s flour milling capacity • Total assets > $10 billion • Net sales > $13 billion

  3. Purpose • Cooperative joint venture with farmers only. • Do not want a hostile environment and will only proceed with alliance after shareholder approval. • Do not seek control of UGG (ownership < 50%) • Especially considering Canada’s regulatory environment.

  4. Current Ownership of UGG • Oppenheimer & Company 13% • US Risk Arbitrageurs 6% • Canadian Institutions 20% • Retail Investors 43% • UGG Employees 3% • Alta-Man 15% Total: 100%

  5. Benefits to UGG • Additional market for UGG’s grain through a more secure link to ADM processing plants. • Gain increased market presence through ADM and its international partners. • Access to a world-leading agri-business company with broad range of merchandising, milling, processing and product research expertise. • ADM will make significant Equity investment in UGG. • Reduce UGG’s leverage close to its target of 35% debt : capital. • Provide financial flexibility moving forward, given UGG’s significant capital expenditure plans. • Accelerate UGG’s plan for modernization of its grain network. • Reduction of Administrative Cost.

  6. Benefits to ADM • UGG is an attractive partner. It has efficient grain handling facilities and distribution network in Canada. • We hope to strengthen our relationship with UGG customers, who are among the most innovative farmers in Western Canada. • Diversification of crop base. • Reduction of Administrative Cost.

  7. Mechanics of Offer • Step 1: ADM purchases $35 million of convertible debentures. With the approval of the shareholders these are converted to 2.2 million new shares at $16/share • If rejected by shareholders, ADM will withdraw from the venture. • Step 2: ADM purchases additional 4.8 million new shares at $16/share • Total shares now held by ADM- 7 million (45% ownership) • Step 3: Formal offer from UGG to its shareholders to buy back 3.9 million shares at $16/share • ADM will not tender to this issuer bid

  8. Offer Details • Offer Price/share: $16 • Net increase in number of shares: 3.2 million • Total outstanding shares (post-offer): 15.7 million • Net capital infusion: $50 million • ADM equity ownership in UGG: 45% (UGG retains control) • Current DCF value: $9.26/share • Alta- Man Offer: $13.75/share • Current market value: $14.45/share

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