US sugar giant Imperial Sugar Company has sold two subsidiaries, Michigan Sugar Company and Great Lakes Sugar Company, to grower cooperative Michigan Sugar Beet Growers for a gross purchase price of US$45m, plus the assumption of US$18.5m of debt.
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The transaction closed immediately after signing of the agreement.
The purchase price for the transaction was comprised of US$29m in cash, with the remaining US$16m financed by Imperial as two separate term loans to the Growers, one in the principal amount of US$15m and the second in the principal amount of US$1m. The Growers have also assumed the obligations under certain industrial development bonds related to Michigan Sugar having a face value of approximately US$18.5m, although Imperial will not be released from its contingent obligations with respect to such industrial development bonds.
Upon completion of the transaction, Imperial expects to apply approximately US$19.3m of the net after-tax proceeds to permanently reduce debt. Michigan is a leading north central processor of sugar beets producing refined sugar products. Michigan represented about US$162m in net sales in the fiscal year ended 30 September 2001.
Imperial will continue to market all refined sugar products for Michigan under an exclusive ten-year marketing agreement. The marketing fee will be 2.5% of the net selling price of the refined sugar marketed by Imperial for Michigan with an incentive factor of 0.5% of the net selling price if certain competitive targets are met.
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By GlobalDataRobert J. McLaughlin, CEO of Imperial Sugar Company stated: “We are pleased to have concluded this transaction, which represents a significant component to our plan to reduce debt. We look forward to acting as a value-added provider of marking services to Michigan, and we will make every effort to provide a seamless transition of the Michigan business, ensuring that our customers are well serviced with the quality products they have come to expect.”
