2. Discontinued Operations

Divestiture of Frozen Fruit

On October 12, 2023 (the "Closing Date"), the Company, together with its subsidiaries Sunrise Growers, Inc. ("Sunrise Growers"), Sunrise Growers Mexico, S. de R.L. de C.V. and SunOpta Mx, S.A. de C.V ("SunOpta Mexico"), completed the sale of certain assets and liabilities of its frozen fruit business ("Frozen Fruit") pursuant to the terms of an Asset Purchase Agreement with Natures Touch Mexico, S. de R.L. de C.V. and Nature's Touch Frozen Fruits, LLC (the "Purchasers"). Included in the assets sold were frozen fruit processing facilities located in Edwardsville, Kansas, and Jacona, Mexico. At the Closing Date, the estimated aggregate purchase price comprised (i) cash consideration of $95.3 million; (ii) a short-term note receivable of $10.5 million, which was paid in five consecutive monthly installments of $2.1 million beginning 30 days following the Closing Date; (iii) secured seller promissory notes due in three years and with a stated principal amount of $20.0 million in the aggregate (the "Seller Promissory Notes"); and (iv) the assumption by the Purchasers of $15.7 million of accounts payable and accrued liabilities of Frozen Fruit.

The estimated aggregate purchase price was subject to post-closing adjustments based on a determination of the final net working capital as of the Closing Date. As at the Closing Date and December 30, 2023, the Company had recognized a $0.5 million net receivable from the Purchasers based on the Company's estimate of the final net working capital and post-closing adjustments. In the fourth quarter of 2024, the parties resolved certain disputed items in connection with the determination of the final net working capital, resulting in a net reduction in the aggregate purchase price in favor of the Purchasers of $5.1 million. The Company incurred professional fees of $0.3 million in connection with the dispute arbitration process, which together with the reduction in the aggregate purchase price is recognized as an additional pre-tax loss on divestiture in discontinued operations on the consolidated statement of operations for the year ended December 28, 2024.

The Seller Promissory Notes bear interest at a rate per annum equal to the Secured Overnight Financing Rate ("SOFR"), determined quarterly in advance, plus a margin of 4.00% for the first year and 7.00% for the second and third years. Interest is payable quarterly in-kind. The Seller Promissory Notes mature on October 12, 2026, and outstanding principal and accrued and unpaid interest is payable on the maturity date. Upon initial recognition, the Company determined that the fair value of the Seller Promissory Notes approximated their stated principal amount and no premium or discount was recognized. As at December 28, 2024 and December 30, 2023, the principal amount of the Seller Promissory Notes, together with accumulated accrued and unpaid in-kind interest of $2.5 million and $0.3 million, respectively, is recorded in other long-term assets on the consolidated balance sheets. The Seller Promissory Notes are secured by a second-priority lien on certain assets of Frozen Fruit acquired by the Purchasers. As at December 28, 2024 and December 30, 2023, the Company had not recorded any allowance for credit losses related to the Seller Promissory Notes.

The table below presents the major components of the results of discontinued operations reported in the consolidated statement of operations for each of the three years in the period ended December 28, 2024. The results of operations for the year ended December 31, 2022 include the divestiture of the Company's sunflower business in October 2022.

	December 28, 2024		December 30, 2023		December 31, 2022
	$		$		$
Revenues	-		200,029		343,267
Cost of goods sold⁽¹⁾	553		211,467		320,143
Selling, general and administrative expenses⁽²⁾	621		8,683		10,843
Intangible asset amortization	-		6,000		8,498
Other expense (income), net⁽³⁾	(378	)	10,612		(2,746	)
Foreign exchange loss	(101	)	(3,333	)	(1,641	)
Interest expense, net	23		554		1,578
Earnings (loss) before loss on divestiture	(718	)	(33,954	)	6,592
Pre-tax loss on divestiture	(5,435	)	(119,821	)	(31,468	)
Loss from discontinued operations before income taxes	(6,153	)	(153,775	)	(24,876	)
Income tax benefit	(234	)	(167	)	(16,154	)
Net loss from discontinued operations	(5,919	)	(153,608	)	(8,722	)

(1) For the year ended December 28, 2024, cost of goods sold reflects the write down in the carrying value of frozen fruit inventory that was not acquired by the Purchasers to its estimated net realizable value. During 2024, the Company completed the disposal of the $5.9 million of frozen fruit inventory reported as held-for-sale as at December 30, 2023.

(2) For the year ended December 28, 2024, selling, general and administrative expenses include additional severance costs for former employees of Frozen Fruit not ultimately retained by the Purchasers, as well as the true-up of pre-divestiture profit-sharing bonuses payable to certain Mexican employees of Frozen Fruit.

(3) For the year ended December 28, 2024, other income includes insurance recoveries related to the recall of specific frozen fruit products initiated in the second quarter of 2023 (see note 19), together with gains on the settlement of certain pre-existing legal matters related to Frozen Fruit.