Note 4 - Acquisition of Controlling Interest in Repreve Renewables, LLC
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Mar. 25, 2012
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Mergers, Acquisitions and Dispositions Disclosures [Text Block] |
4.
Acquisition of Controlling Interest in Repreve Renewables,
LLC
In
April 2010, the Company entered into an agreement with two
other unaffiliated entities to form Repreve Renewables, LLC
(“Renewables”) and received a 40% ownership
interest for its $4,000 contribution. Renewables
is a development stage enterprise formed to cultivate, grow
and sell dedicated energy crops, including biomass feedstock
intended for use as a fuel in the production of energy as
well as to provide value added processes for cultivating,
harvesting or using biomass crops. Renewables has
the exclusive license to commercialize FREEDOM™
Giant Miscanthus (“FGM”). FGM is a
miscanthus grass strain, which is a C4 plant that was
developed by Mississippi State University to be a dedicated
energy crop with high biomass yield from minimal input
requirements. Renewables’ success will
depend in part on its ability to license individual growers
to produce FGM and to sell feedstock to those
growers. The Company’s investment in
Renewables is anticipated to provide a unique revenue stream
and support its strategy to grow the REPREVE® brand and
related sustainability initiatives.
On
October 6, 2011, the Company and one other existing
Renewables shareholder each acquired an additional 20%
ownership interest for $500 from the third Renewables
shareholder. The additional ownership interest
purchased by the Company was financed with available
cash. Using the amounts paid per membership unit
in the October 6th transaction as a basis, the Company
determined that the acquisition date fair value of Renewables
was $2,500. This resulted in the Company’s
previously held 40% equity interest being valued at
$1,000. As a result of remeasuring its existing
40% interest to this estimated fair value, the Company
recorded a loss of $3,656 during the three months ended
December 25, 2011.
The
total fair value of Renewables was allocated to the tangible
assets, liabilities and intangible assets acquired as
follows:
The
intangible assets acquired and their respective estimated
average remaining useful lives over which each asset will be
amortized on a straight line basis, are as follows:
The
acquisition of the additional 20% ownership interest has
given the Company a 60% ownership interest in
Renewables. Beginning with the second quarter of
fiscal year 2012, the Company’s consolidated financial
statements include the financial position and results of
operations of Renewables. Prior to the acquisition, the
Company’s share of Renewables’ losses were
recorded as Equity in (earnings) losses of unconsolidated
affiliates. As Renewables is a development stage
enterprise and has no revenues and limited operating
activities, the results of Renewables’ operations since
the acquisition are shown within Other Operating Expenses,
net in the Condensed Consolidated Statement of
Operations.
Renewables’
operating expenses are funded through contributions from its
members.
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