Sale of Tate & Lyle Bundaberg
Tate & Lyle PLC
8 June 2000
Tate & Lyle PLC - Sale of Tate & Lyle Bundaberg and associated businesses
Tate & Lyle PLC ('Tate & Lyle' or the 'Group') announces that it has agreed to
sell its wholly-owned Australian sugar business, Tate & Lyle Bundaberg
('Bundaberg'), and associated businesses, to Belgium-based Societe Financiere
des Sucres s.a. ('Finasucre'). The consideration is A$425 million (£162
million), debt free, subject to adjustments. Of this, A$144 million (£55
million) will be paid in cash at completion. The balance is being satisfied
by a mixture of the assumption and repayment of debt and accrued interest by
Finasucre of A$141 million (£54 million), subject to adjustment, and the
payment of pre-completion dividends.
Headquartered in Brisbane, Bundaberg is the third largest cane miller in
Australia, operating from seven mills, and is also a significant sugar refiner
and a major cane grower.
Included in the sale are: Bundaberg's raw sugar and sugar refining business; a
50% interest in Bundaberg Rum, which is operated in partnership with United
Distillers and Vintners (Australia) Limited (a subsidiary of Diageo plc); and
Bundaberg's engineering business, Bundaberg Foundry Engineering Limited.
The value at 25 March 2000 of net assets to be sold was A$342 million (£130
million). This figure excludes the A$141 million (£54 million) of debt within
Bundaberg which will be assumed by Finasucre and forms part of the
consideration.
Profit before tax attributable to these net assets (including debt) in the 12
months to March 2000 was £2 million.
Goodwill arising on the acquisition of Bundaberg was written off to Group
reserves in 1991. £12 million of this goodwill has now been written back and
taken as an exceptional loss in the Group profit and loss account for the 18
months to March 2000. The excess of the consideration over net asset value
will enhance Tate & Lyle shareholders' funds on completion of the transaction.
The sale of Bundaberg is conditional on approval (or no objections being
received) from the Australian Treasurer under the Foreign Acquisitions and
Takeover Act 1975 (Commonwealth of Australia). This condition is expected to
be met within one month.
Proceeds of the sale will be used to reduce Group debt.
Finasucre has also made an offer to acquire the Group's interest in Vietnamese
cane sugar producer, Nghe An Tate & Lyle Sugar Company ('NAT&L'). Tate & Lyle
will review this offer with its partners and the financiers to NAT&L. The
offer is subject to the achievement by NAT&L of throughput targets which are
expected to take up to three years to attain.
Finasucre is a privately-owned holding company operating beet sugar factories
and producing lactic acid in Belgium. The company also owns a cane sugar
estate in Africa.
Larry Pillard, Tate & Lyle Chief Executive said:
'The sale of Bundaberg is an important step in enhancing the focus of Tate &
Lyle on activities that add value to carbohydrates. Along with other recent
disposals it underlines our determination to realise value for Group
shareholders.
'When Tate & Lyle bought Bundaberg in 1991, it was expected that future
deregulation of the Queensland sugar industry would facilitate fuller
integration of Bundaberg's operations with other Group businesses.
'However, the recently introduced Queensland Sugar Industry Act 1999 continues
to require that all raw sugar produced in Queensland is purchased and sold by
a central organisation. It therefore seems unlikely that the enhanced returns
and value added benefits available from vertical integration would be easily
accessible in the near future.
'Consequently we have decided that this is an appropriate opportunity to sell
Bundaberg. In doing so we acknowledge the valuable support and commitment of
Bundaberg's management team and employees to Tate & Lyle since 1991.'
Olivier and Paul Lippens, Managing Director and Director, respectively, of
Finasucre, said:
'The acquisition of Bundaberg is consistent with our objective of investing in
high quality assets in areas of strategic importance in the world sugar
market. This is a long-term investment for us and we look forward to
supporting Bundaberg's management and employees in the future development of
the business.'
Enquiries:
For Tate & Lyle:
Charles King 020-7626-6525
Chris Fox 020-7626-6525 (Press)
For Finasucre:
Olivier Lippens, Managing Director (00)-32-75-71-83-59
Robert Fleming & Co. Limited (Financial Advisers to Finasucre)
Tom Lindsay 020-7638-5858
Andrew Brindley 020-7638-5858
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