NORANDINA - Investment Opportunities, Tomates del Norte

Investment Opportunities

TOMATES DEL NORTE S.A.

THE PROJECT

Tomates Del Norte (Tomanor) is seeking funding, in the form of a stock partner or convertible debt to develop its tomato farms. By doubling its own raw material supply, Tomates Del Norte will be able to insure its tomato processing plant operates at full capacity. During the restructuring phase of this investment, approximately US$ 3.0MM is required to pre-pay short-term liabilities (US$ 2.0) and to expand tomato growing operations (US$ 1.0). In the second phase, an additional US$ 6.0 million will be required to exercise the option to purchase the processing plant and lands which Tomanor currently rents. Tomates Del Norte seeks funding for both projects in the form of a 7-year loan.

THE COMPANY

Tomates Del Norte S.A. was created in October 1995 after Ms. Polanco, the main shareholder, obtained a concession to develop Chao's Agro-industrial Complex. The compound includes a tomato paste production facility and 1,700 hectares of agricultural lands. Tomates Del Norte estimates sales of US$ 6.7 millions in 1997, its first full year of operation. Fully capitalized and operating at full efficiency, Tomates Del Norte could quickly reach sales of $14MM because processed tomatoes are a commodity with a stable market demand.

Currently, Tomates Del Norte's tomato processing factory operates at 50% of its optimum capacity because Tomanor lacks working capital to seed additional land. Although Tomates Del Norte already plants 300 hectares of tomatoes on rented land, an additional 300 hectares of production are needed to operate its tomato processing factory at optimum capacity.

THE MARKET

Tomato paste is an international commodity, which facilitates its sale in the international market. The price of tomato paste has been relatively stable over the last few years, at approximately US$ 800 per metric ton and international tomato paste production costs are typically US$ 535 per metric ton. Worldwide there is a 240,000 metric ton deficit of tomato paste, so tomato paste companies tend to be very profitable. Currently, both Nestle and Icaton (Chilean company) operate in Peru, taking advantage of Peru's unique position as the only country which can cultivate tomatoes all year round. Peru exports 5,300 tons of tomato paste annually.

PROJECT FINANCING

Phase I Financing: Restructuring

Shareholders US$ 1. 0 million

Investors US$ 2. 0 million

Total US$ 3. 0 million

Phase II Financing: Purchase of Lands and Factory Through Execution of Option

Shareholders US$ 2. 0 million

Investors US$ 4. 0 million

Total US$ 6. 0 million

Total US$9.0 million

Tomates Del Norte US$ Balance Statement (September, 30, 1996)

Current Assets		Current Liabilities
Cash	4	Loan	1,900
Accounts receivable	138	Accounts payable	223
Inventory	1,168	Taxes payable	---
Other Total	857 2,167	Total	2,123
Non-Current Assets		Non-Current Liabilities
property, plant, equip.	1,054	Banco Wiese Loan	898
		Social Benefits	6
		Total	904
		Shareholder's equity	194
Total Assets	3,221	Total Liabilities	3,221

Tomates Del Norte Expansion Project's Estimated Earnings and Loss Statement

	Year 1	Year 2	Year 3	Year 4	Year 5
Sales	8,651,820	12,398,400	12,398,400	12,398,400	12,398,400
Cost of Sales	5,658,678	7,587,051	7,776,724	7,971,918	8,172,462
Gross Profit	2,993,142	4,811,349	4,621,676	4,426,482	4,225,938
General Expenses	314,135	319,830	325,691	331,702	337,827
Operating Profit	1,754,447	3,351,399	3,300,305	3,064,540	2,821,311
Net Profit	1,227,442	2,299,544	2,187,396	2,070,030	1,941,801

US$/ton FOB Price of Tomato Paste (1984 - 1994)

"El Comercio" report (January 26, 1997)

"The export potential of tomato paste was classified as 'highly positive' by the director of the National University of Agriculture, Francisco Delgado, who added that there is currently a capacity deficit of more than 240 thousand tons world-wide."