International sugar producer Almoiz Group has put forward a proposal to acquire up to 54.03% interest in Isis Central Sugar Mill for a total investment of up to $35 million.
A Scheme Implementation and Subscription Deed has been entered in to between Isis Central Sugar Mill (ICSM) and the multi-million dollar industrial group.
The proposal has the unanimous support of the ICSM Board of Directors and will now go before the court and shareholders for approval. A shareholder vote could take place by early October.
Almoiz Industries is headquartered in Lahore, Pakistan.
The company is recognised globally as a high-quality producer of white refined sugar and molasses, and holds a substantial share in the market. Almoiz has strong corporate clients including Pepsi.
ICSM Board of Directors chairman Peter Russo said the announcement came after the mill surveyed shareholders in 2017 and found the majority wanted the board to take action to ensure the mill remained in a strong and viable position in the future.
“We began a strategic review process, methodically examining a range of options. This included some sort of third party investment or partnership,” Mr Russo said.
“A range of investors expressed an interest in exploring a potential transaction with ICSM. We shortlisted interested parties for further discussion and investigation.
“After careful consideration, the Board of Directors and financial advisors KPMG identified a proposal from the Almoiz Group as being an attractive option that best aligned with the company’s strategic priorities.”
“Under the proposed transaction, the Almoiz Group will acquire up to a 54.03% stake in ICSM in two steps for a total investment of approximately $35 million.”
Isis Mill shareholders to approve proposed Almoiz Group offer
However he stressed that the proposed transaction would only proceed if certain conditions precedent were met. This includes court approval of transaction and support from current shareholders and their approval of the adoption of a new constitution.
“It is shareholders who will decide the future of Isis Central Sugar Mill.
“If successful, the first step in the transaction is expected to be completed in the second half of the 2019 calendar year.”
The proposed transaction will be implemented in two steps:
- $16 million will be paid directly to ICSM shareholders to acquire 35% of their existing shares pro-rata, at $10.45 per share.
- $9 million will be used to subscribe for new ICSM shares. It is intended that $6 million be paid directly to eligible growers over three years ($2 million per season) in the form of additional price for cane payments. $1 million is earmarked for a planting incentive of $250 per hectare for the 2020 crushing season and $2 million will be used for working capital.
This initial investment would give Almoiz Group a 45.66%* equity stake in ICSM
- $10 million will be used to subscribe for new ICSM shares, at an issue price of $10.45 per share. Additional capital intended to fund growth and expansion initiatives and bolster working capital.
Step Two is subject to the satisfaction of certain conditions being met and is expected to occur 24 –36 months after step one.
This second investment would increase Almoiz Group’s interest in ICSM by 8.37% to 54.03%* (based on ICSM’s current issued capital).
The third party investment would support ICSM plans to expand, modernise and increase tonnage, including providing the additional capital needed to progress projects including the expansion of cane railway in to Wallaville.
Investment could help diversify industry in to new, high value sectors
Mayor Jack Dempsey said the proposal supported the work Council was doing with the local sugar industry to look at opportunities to diversify into new high value sectors.
“This proposal has the potential to help secure a future for our sugarcane industry,” Mayor Dempsey said.
“This investment could bring in the skills and capital required to manage the mill into the future.
“Generally speaking, broader overseas ownership will mean better access to global markets for Bundaberg Region sugar.”
Mr Russo said the board believed the proposed transaction addressed feedback from shareholders and provided significant benefits, including:
- an opportunity for shareholders to realise some value from their shares, while also retaining a stake in ICSM
- funds paid directly to growers over three years to retain and increase local cane supply
- additional capital provided by the Almoiz Group will strengthen ICSM’s financial position, providing an additional buffer to withstand difficult economic conditions and funds to pursue growth opportunities
- long term strategic partnership, whereby ICSM will benefit from Almoiz Group’s significant experience in the international sugar industry and other export sectors
The new constitution required to make the deal will see the ICSM board increase to seven members.
Grower shareholders will be strongly represented on the board by four of the seven directors after step one and three of the seven directors after step two, including one independent director.
- UPDATE (6 November 2019): Isis Sugar Mill shareholders accept Almoiz offer