Tate & Lyle, a world leader in sugar, cereal sweeteners and starches, yesterday announced that it has signed a conditional agreement to sell Tate & Lyle North American Sugars Inc., trading as Domino Sugar (“Domino”), to an investment group led by Alfonso and J. Pepe Fanjul.
The sale agreement was signed on July 26, 2001 and is subject to, inter alia, the purchaser completing the necessary financing arrangements and approval by US competition authorities.
The consideration will be US$ 180 million ((pound) 127 million) (subject to closing adjustments) plus a maximum conditional earn out of US$ 25 million ((pound) 18million) payable over 4 years from date of signing. The earn out will principally be calculated based on sugar and energy prices. Proceeds of the sale will be used to reduce Group debt. Total consideration will not exceed US$ 205 million.
The sum of US$ 155 million ((pound) 109 million) will be paid in cash on the completion date and the balance of US$ 25 million ((pound) 18 million) being an interest bearing subordinated 10-year loan note issued by the purchaser. Part of this will be redeemable in annual installments commencing 42 months from the completion date with the balance of US$ 11.7 million ((pound) 8.2 million) redeemable 120 months from the completion date.
A write down of (pound) 227 million (which included (pound) 149 million of goodwill previously written off to reserves) on the planned sale of Domino was included in the results for the year ended March 31, 2001. Included in the sale are Domino cane sugar refineries at Baltimore, Arabi (Chalmette, Louisiana), and Brooklyn; and the Allen Sugar Company, a distributor in Cleveland. The value at March 31, 2001 of Domino’s net assets (after the write downs), adjusted to reflect the terms of the transaction, was US$ 180million ((pound) 127 million). Losses before interest attributable to these net assets in the 12 months to March 2001 amounted to US$ 25 million ((pound) 17 million).
The Tate & Lyle Group, with headquarters in the UK, operates in over 50 countries. It produces and processes sugar from cane and beet, and processes cereals (predominantly maize and wheat) into sweeteners and starches and other products.
Tate & Lyle ordinary shares trade on the London Stock Exchange and may be accessed on Bloomberg under the symbol Tate LN, on the Reuter Equities 2000 Service under TATE.L and on Quotron under TATEU.EU. In the US its ADRs trade on the NASD OTC Bulletin Board under TATYY (each ADR is equal to four ordinary shares).