Regarding the potential “carve-out” of the animal nutrition business, will the company report a gain on the portion of the company sold in the “carve-out”?

As an answer to your question we point out some salient points.

  1. Our animal nutrition business has its roots in our founding during 1995.
  2. The "carve-out" does not result in AgFeed, the holding/parent company selling its shares, new shares issued by the animal nutrition business will be offered to the public as a result of the planned IPO.
  3. The animal nutrition business will be its own entity with its own Board of Directors and management.
  4. The proceeds from the planned IPO will all go directly to support the growth and development of the animal nutrition business.  Building value for all of the shareholders of the animal nutrition business those that purchase stock directly in the animal nutrition business as well as those that own a piece of the animal nutrition business through their holdings in AgFeed the holding company.
  5. We expect that as a result of its percentage interest in the animal nutrition business AgFeed the holding company will continue to report the results of the animal nutrition business as part of its consolidated reporting for tax purposes.
  6. We expect that the market valuation that will be established for the animal nutrition business will be greater than that which is recognized has having it be a division of AgFeed and as a result their will be a positive impact on AgFeed's overall market valuation.
  7. There is a significant growth opportunity that presents itself to the animal nutrition business as a result of the industrialization of the feed business in China, the Food Safety Law and the modernization of the hog industry.
  8. As an independent publicly traded entity the animal nutrition business will have the ability to access the capital markets to support its growth trajectory.  Growth reflecting organic growth and acquisition opportunities.
  9. The independence of the animal nutrition business and its status as a public company will enhance its ability to attract and retain top personnel.

Finally in direct response to your specific question there will not be any accounting gain, or loss on the books of AgFeed as a result of the proposed "carve-out".