Mackay Sugar has received a non-binding indicative proposal for recapitalisation from German-based sugar manufacturer Nordzucker AG.
The proposal remains subject to finalising a binding agreement, with Mackay Sugar agreeing to an exclusivity period until the end of December this year. If successful, the deal will see the agreed funds used for capital improvements on mills, as well as a two-stage repayment of the $2/t levy to growers.
Nordzucker is one of the leading sugar manufacturers in Europe and is headquartered in Braunschweig, Germany. The offer is a major step forward in Mackay Sugar’s recapitalisation process, although the final amount of equity and/or debt to be contributed by Nordzucker is still to be agreed.
The parties have said Mossman Mill would not form part of the transaction and would remain subject to the option granted to Far Northern Milling Pty Ltd. Mackay Sugar chairman and CEO Mark Day said the proposal was announced to growers and industry stakeholders at today’s AGM in Mackay.
Mr Day said the Board was “very pleased” to be able to make the announcement and believed the investment had the potential to take the Mackay sugar industry significantly forward.
“The non-binding indicative proposal has been endorsed, in principle, by the Mackay Sugar Board,” Mr Day said. “But it is also important that we emphasise there is no certainty, or guarantee, the proposal would ultimately result in a binding offer or concluded transaction.
“We are working toward what represents an important investment in Mackay Sugar, as well as in the industry as a whole, in this region.
“Nordzucker has a long and successful sugar history in northern Europe with a heritage very similar to Mackay Sugar’s grower-owned shareholder base, dating back to the early 1800s.”
While the non-binding Indicative Proposal has received in-principle support from the Board of Mackay Sugar, it remains subject to a number of financial, regulatory, legal and shareholder-contingent conditions.
Mr Day said a series of shed meetings would be held to discuss the proposal directly with growers and shareholders, who would be kept informed of the process as it developed.
“Ultimately, the Mackay shareholders will have to vote in support of the final bid from Nordzucker, for the proposal to be successful,” Mr Day said. “The Board looks forward to having these shed meetings with growers and shareholders, to further discuss this important opportunity, which is vital for the future prosperity of the sugar industry in Mackay region.”
The transaction is scheduled to be completed in late March 2019, subject to binding agreement being reached between the parties.