Funds received totalled $51.1m, Imperial said.
Holly Sugar’s primary operations include two beet sugar factories, located in Brawley and Mendota, California, a distribution facility located in Tracy, California and Holly Hybrids, a beet seed processor and marketer located in Sheridan, Wyoming.
Holly Sugar, which represented approximately 15% of Imperial’s production capacity, primarily services customers in the industrial and foodservice segments. The company’s cane refineries located in Savannah, Georgia and Gramercy, Louisiana, which are unaffected by this sale, also service these market segments as well as major retail customers through the company’s strong Imperial and Dixie Crystal consumer brands, along with numerous private label offerings. Imperial will continue to own the Holly brand, which is sold in certain of its business segments, including to certain retail customers. The buyer acquired rights to the Spreckels brand name.
In anticipation of the closing of this transaction, Imperial has made a $21.4 million contribution to its defined benefit pension plans, which satisfies most of its funding requirements for 2006 and 2007. It is expected that aggregate cash funding requirements for those years will be reduced by an amount in excess of the contribution just made.
“This transaction will make our company even stronger with a greater focus on its value-added cane strategy, less energy dependence, lower seasonal working capital needs and lower cash requirements related to pension funding and capital expenditures,” said Robert A. Peiser, Imperial’s president and CEO. “I would like to thank all of our dedicated associates at our Brawley, Mendota, Tracy and Sheridan locations for their dedicated and professional efforts. They will be missed by all of us and we wish them continued success under their new Southern Minnesota ownership.”
Holly’s beet sugar production operations are more energy intensive than cane refining, consuming approximately 45% of Imperial’s natural gas requirement to produce 15% of its output. In addition, approximately 24% of its capital expenditures in the current fiscal year was invested in the beet facilities and a greater percentage was anticipated for next year. Finally, Holly has been the principal source of the company’s seasonal working capital needs.