Is sweet success near for Wilmar subsidiary and Proserpine?

Sucrogen now awaits creditors’ approval after striking a deal with Proserpine Administrators.

After failing twice to get the necessary support from Proserpine Co-operative Sugar Milling Association members for the acquisition, Wilmar subsidiary Sucrogen has entered into an agreement with the Administrators of Proserpine Sugar Mill to purchase the assets for a headline price of A$120 million.

The agreement, according to Sucrogen CEO Ian Glasson, effectively preserved and enhanced the value offered to Proserpine Members in the most recent Member vote on the special resolution to sell the mill’s assets to Sucrogen.

“The current agreement comprises a headline price of A$120 million, plus a working capital adjustment, normal settlement adjustments, as well as provisions whereby Sucrogen will absorb all of the mill’s normal operating costs and certain critical capital expenditure incurred from 31 October 2011 until completion of the transaction,” said Mr Glasson.

Under the terms of the agreement, Sucrogen will also provide interim finance, via a second commercial loan facility of A$15 million, to support the operation of Proserpine and fund operating costs until the sale can be completed.

Following the most recent Member vote, the Board of Proserpine determined that they were unable to secure sufficient funding from rival bidder COFCO/Tully to repay existing debts and allow Proserpine to fund its ongoing trading obligations. Consequently, the Board of Proserpine placed the business into voluntary administration.

Mr Glasson said that the Administrators from insolvency specialists KordaMentha will seek approval for the transaction by creditors, pursuant to a Deed of Company Arrangement, that will be determined at the second meeting of creditors, to be held on or before 12 December 2011.

The transaction, once approved by creditors, is expected to be completed before 31 December 2011.