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Margo Caribe Announces Joint Venture to Develop Sod Farm in Puerto Rico
October 15, 2002
VEGA ALTA -- Fernando Rodriguez, the President and Chief Operating Officer of Margo Caribe, Inc. (Nasdaq: MRGO), announced today that Margo Caribe, through its wholly-owned subsidiary Margo Nursery Farms, Inc., has entered into a joint venture to grow sod, palms, and trees on an approximately 254 acre farm located on the South Coast of Puerto Rico. Margo will own one-third of the equity of the new entity, Salinas Holdings, Inc. The remaining two-thirds will be owned in equal parts by Mr. Mark Greene and another local private investor. Mr. Greene was formerly a director of Margo and resigned from the Board of Directors in connection with this transaction. Margo is required to make an equity cash contribution to the new entity in the amount of up to $775,000. The farm will be leased from an entity controlled by the private investor for an initial 10-year term with renewal options for an additional 20-year period.
The new entity has entered into a five-year management agreement with Margo Nursery Farms, Inc. (automatically renewable for additional five-year terms unless otherwise elected by Salinas Holdings) whereby Margo Nursery Farms will manage the new entity and will be responsible for all sales and marketingactivities for the new entity.
The operations of the new entity will not be consolidated with the financial statements of Margo, but instead will be reported on the equity method of accounting for investments. Accordingly, Margo's financial statements will reflect Margo's proportionate share (33.3%) in the net income or loss of the new entity.
Mr. Rodriguez stated that he was very pleased with the transaction because it provided Margo with an opportunity to further diversify its revenues by entering into the sod business without having to make a large initial investment. Mr. Rodriguez felt that the continued strength of the residential housing market in Puerto Rico offered excellent opportunities for the sod business. He noted that the large size of the farm would also facilitate the cultivation of palms on a larger scale.
Margo Caribe, Inc. is currently engaged in the business of growing and distributing a wide range of both indoor and outdoor tropical foliage and flowering plants in Vega Alta and Barranquitas, Puerto Rico. The Company is engaged in the sale of lawn and garden products, the provision of landscaping services and maintenance throughout Puerto Rico and Caribbean and the manufacturing of potting soils and other lawn and garden goods under the Rain Forest trade name, as well as in the process of permitting a residential development project.
FORWARD LOOKING STATEMENTS
This press release contains certain "forward looking statements" concerning Margo Caribe's economic future performance. The words "expect", "anticipate", "hope" and similar expressions are meant to identify "forward looking statements" within the meaning of the Private Securities Litigation reform act of 1995.
Margo Caribe wishes to caution readers not to place undue reliance on any such "forward looking statements", which speak only as of the date made and to advise readers that various factors, including regional and national economic conditions, natural disasters, competitive and regulatory factors and legislative changes, could affect Margo Caribe's financial performance and could cause Margo Caribe's actual results for the future periods to differ materially from those anticipated or projected.
Margo Caribe does not undertake and specifically disclaims any obligation to update any "forward looking statements" to reflect occurrences or unanticipated events or circumstances after the date of such statements.