Mackay Sugar snaps up mill
MACKAY Sugar has acquired Mossman Central Mill for $25.3 million.
Mackay Sugar chairman Andrew Cappello said the acquisition, announced at a shareholder meeting yesterday, would complement operations, contribute to the growth of core business and was expected to result in additional shareholder value.
"This is a positive step for Mackay Sugar; it presents further cane expansion opportunities and will increase our sugar production," Mr Cappello said.
"Under Mackay Sugar ownership there will be confidence in the long-term future of the Mossman Central Mill.
"We will incentivise cane production and expect a 25% increase in cane supply in the first four years.
"The combination of the increased cane volumes and the cost savings in managing the Mossman Mill, as part of Mackay Sugar's operations, are expected to generate greater financial returns for our shareholders," Mr Cappello said.
Under this transaction, the milling and related assets will be acquired by Mackay Sugar through the issue of approximately $12 million in Mackay Sugar shares and refinancing $13 million in debt.
The shares, which amount to approximately 3.3% of the issued capital of Mackay Sugar, will be held by Mossman Central Mill.
The export sugar produced by Mossman Central Mill will continue to be marketed through Queensland Sugar Limited.
However, Mossman Central Mill will retain its food grade bagged sugar operation, which it markets under the brand 'Daintree Gold'. Daintree Gold will be supplied raw sugar by Mackay Sugar under a commercial agreement.
The transaction is subject to a number of conditions precedent and is expected to be completed on June 1.
Mr Cappello said Mackay Sugar would continue the Cane Supply Agreement that was in place with the Mossman growers for the next three years.
"Similarly, we will be taking on the employment obligations for those engaged in the cane transport and milling operations at Mossman.
"With the acquisition happening close to the start of the 2012 season, we will use the six-month crushing period to plan the integration of personnel and operating systems as appropriate.
"I am confident that Mackay Sugar can offer the platform necessary to expand Mossman's cane supply and, consequentially, increase our raw sugar production to take advantage of the demand for sugar in the Asian region," Mr Cappello said.
- The Mossman Mill is about 75km north of Cairns
- It is supplied with cane from about 7300ha, with a cane estimate of 550,000 tonnes for 2012
- The mill is designed to crush more than 1 million tonnes of cane per annum.
- Mackay Sugar operates three mills in the Mackay region, supplied with cane from more than 70,000ha. The estimated 2012 harvest could exceed 5.5 million tonnes