Legumex Walker and The Scoular Company Establish Strategic Alliance

Agreement positions Pacific Coast Canola for growth; Scoular to invest in Legumex Walker

WINNIPEG, Oct. 27, 2014 /CNW/ - Legumex Walker Inc. (TSX: LWP) ("the Company") announced today that it has entered into a long-term strategic alliance with The Scoular Company ("Scoular"), a century-old agricultural marketing company with operations across North America and global trading partners.  The alliance comprises two key elements.

First, the Company's Pacific Coast Canola subsidiary ("PCC") and Scoular have agreed to enter into a long-term arrangement in which Scoular will procure all canola seed for processing at the PCC plant and will market all of the canola meal and canola oil produced by PCC.  Key terms of the arrangement include:

• Scoular will finance the canola seed as well as the meal and oil receivables on favorable terms;
• PCC will have access to Scoular's highly efficient logistics network which will enhance the seed supply chain and add value to the marketing of meals and oils; and,
• Scoular employees will work with PCC to drive local seed production in the Pacific Northwest, with a focus on non-GMO and non-GMO high-oleic seed varieties that will differentiate PCC's products from those of its competition.

Second, Scoular will invest in a CAD$16.5 million Legumex Walker Inc. convertible debenture that is expected to help link Scoular's marketing and transportation networks to Legumex Walker's specialty crops business. The debenture will have an interest rate of 7.75% and will be convertible at Scoular's option into Legumex Walker common shares at CAD$6.75 per share.

"Our alliance with Scoular is the product of extensive discussions in which we have found numerous synergies with our specialty crops business in the U.S. and Canada, as well as the PCC relationship," said Joel Horn, President and Chief Executive Officer of Legumex Walker Inc.  "We have been pleased to discover a shared commitment to customers in the healthy, specialty food ingredient market.   There is growing demand for these high-value specialty products and we're excited to partner with Scoular as we pursue both short- and long-term opportunities in this area."

"Scoular is very pleased to be working with Legumex Walker.  We admire its innovative approach in working with specialty crop producers on both sides of the border and believe our proprietary origination and extensive logistics network will bring immediate value to these efforts," said Todd McQueen, Senior Vice President of The Scoular Company.  "Our investment in Legumex Walker gives us a platform from which we also expect to jointly discover new opportunities that bring value back to key production areas by offering end users a full spectrum of grains, pulses and specialty crops for feed and food."

"We achieved our highest production levels to date at PCC in the third quarter, operating at 78 percent capacity utilization despite continued feedstock constraints and a temporary over supply of meal that negatively impacted volumes and margins," said Matt Upmeyer, Chief Operating Officer for Pacific Coast Canola.  "Our alliance with Scoular should support even higher crush rates going forward as they help drive the production and availability of locally grown seed, which has the potential to grow significantly.  Scoular has already expanded seed origination to eastern and southern Idaho and will be reaching even farther into key growing regions.  In addition, our alliance should help support our canola product margins by expanding meal and oil sales into new markets, including overseas markets where higher prices are often attainable.  This will provide flexibility in the future to adjust to market dynamics."

Both companies place significant importance on increasing local and regional production of canola seed, of both commodity and specialty varieties.  It is expected that production contracts will increase with the goal of optimizing the volume and product mix coming out of the PCC plant in Warden, Washington.

"The alliance with Pacific Coast Canola is a natural extension of Scoular's growth in the Intermountain and Pacific Northwest growing regions," said Kevin Thompson, Director of Intermountain and PNW markets segments for The Scoular Company.  "In particular, we will have the ability to create substantial freight advantages for movements in and out of PCC's plant, leveraging the Scoular facilities that surround the Idaho dairy shed.  Many customers will find that Scoular can be the solution to most all of their market needs as we begin to operate at PCC in conjunction with our other businesses."

Although the agreements are subject to customary closing conditions, Legumex Walker and Scoular expect the transactions to be finalized within the next week.

AltaCorp Capital Inc. acted as exclusive financial advisor to Legumex Walker in connection with the strategic alliance and debenture financing.

Conference Call

Legumex Walker will host a conference call tomorrow, Tuesday, October 28, 2014 at 8:30 a.m. ET to discuss today's announcement of its alliance with Scoular.  To access the conference call by telephone, dial [phone] or [phone].  Please connect approximately 10 minutes prior to the start of the call to ensure access.  A recording of the conference call will be archived for replay by telephone until Tuesday, November 4, 2014 at midnight.  To access the archived conference call, dial 1-855-859-2056 and enter the reservation number 25544784.

A live audio webcast of the conference call will be available at http://www.legumexwalker.com/investors-presentations.php and http://www.newswire.ca/en/event?type=webcasts. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.

About Legumex Walker Inc.

Legumex Walker is a growth-oriented processor and merchandiser of special crops (sunflower seeds, flax and canary seed), pulses (lentils, peas, beans and chickpeas) and canola products. The Company is one of the largest processors of special crops and pulses in Canada. Legumex Walker has 15 processing facilities strategically located in key growing regions in the Canadian Prairie Provinces, the American Midwest and China; a global sales, logistics and distribution platform; and access to multimodal transportation capabilities. In addition, the Company has an 84 percent interest in Pacific Coast Canola, LLC, which operates the largest commercial-scale canola oilseed processing facility west of the Rocky Mountains.

About The Scoular Company

A 122-year-old company with more than US$6 billion in sales, The Scoular Company operates 90 independent business units that provide diverse supply chain solutions for end-users and suppliers of grain, feed ingredients, and food ingredients around the globe. From nearly 90 offices and facilities in North and South America, more than 750 employees are engaged in the business of buying, selling, storing, and handling grain and ingredients, as well as managing transportation and logistics worldwide. www.scoular.com.

Cautionary Note on Forward-looking Statements

This press release contains "forward-looking information" within the meaning of Canadian securities laws, which may include, but is not limited to, statements relating to the receipt of all approvals for the transactions described in this press release, planting of higher value specialty seed, anticipated support for meal margin and better margins. Such forward-looking information reflects the Company's views with respect to future events and is subject to risks, uncertainties and assumptions, including the risk that the approvals required for the transactions will not be received in a timely manner resulting in delays or termination of the transactions. In addition, the possibility of planting higher value specialty seed, the anticipated support for meal margins and possibly better margins are subject to the business risks relating to the canola harvest, the PCC Plant and marketing of its products, including possible lack of demand for canola meal produced from the PCC Plant, possible problems related to the operation of the PCC Plant, availability of feedstock, the demand for and availability of rail, port and other transportation services, the risk that farmers will not plant higher value specialty seed, as well as those factors referred to in the section entitled "Risk Factors" in the Company's Management's Discussion and Analysis for the period ended December 31, 2013, the period ended June 30, 2014 and the Company's 2014 Annual Information Form, which are available on SEDAR at www.sedar.com. The statements relating to the expected completion of the transactions assume that all approvals will be obtained by October 31, 2014. The statements relating to support for meal margin and possible better margins assume that markets not previously available will become available for meal produced from the PCC Plant. The statements relating to the planting of higher value specialty seed assume that farmers will plant higher value canola seed for the next harvest. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Although the Company believes the assumptions inherent in forward-looking statements are reasonable, undue reliance should not be placed on these statements, which only apply as of the date of this press release.  The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws.

SOURCE: Legumex Walker Inc.

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