Tate & Lyle, a world leader in sugar, cereal sweeteners and starches, yesterday announced the sale of the Western Sugar Company (“Western”) to the Rocky Mountain Sugar Growers Co-operative (“RMSGC”).
The sale agreement was signed on June 6, 2001 and follows the signing of a non-binding Memorandum of Understanding on October 16, 2000. The disposal is conditional on RMSGC finalizing the necessary financing arrangements.
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The consideration will be US$96 million ((pound)68 million) (subject to closing adjustments) plus a further maximum earnout of US$30 million ((pound)21million) payable after June 2003. The earnout is based on sales revenues.
The sum of US$75 million ((pound)53 million) will be paid in cash by the completion date together with US$21 million ((pound)15 million) in installments commencing November 2001 and ending June 2003. Proceeds of the sale will be used to reduce Group debt.
A further write-down on the planned sale of Western amounting to (pound)36 million has been included in the results for the year ended March 31, 2001. This is in addition to the (pound)75 million written down in the first half of the year (which included (pound)25 million of goodwill previously written off to reserves). The effect of these exceptional write-downs on shareholders funds is a reduction of (pound)86 million.
Included in the sale are Western’s six beet factories in Nebraska, Wyoming, Colorado and Montana. The value at March 31, 2001 of Western’s net assets (after the write-downs), adjusted to reflect the terms of the transaction, was US$92million ((pound)65 million). Losses before interest attributable to these net assets in the 12 months to March 2001 amounted to US$5.3 million ((pound)3.6 million).
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By GlobalDataLarry Pillard, Tate & Lyle Chief Executive said:
“This is a major step towards delivering our strategy to divest of non core or non performing assets and focus on value added businesses that offer more stable future earnings. The disposal of Western follows the disposals of Bundaberg and ten other businesses last year and of Zambia Sugar in April.”
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).
