Tate & Lyle, a leader in carbohydrate ingredients, this week announced that it has completed the sale of its Western Sugar Company to the Rocky Mountain Sugar Growers Co-operative (RMSGC).
The consideration is valued at US$85 million (€94million), subject to working capital adjustments. In addition, RMSGC is liable for the repayment of Western's inventory financing programme, US$100 million (€110million) from the Commodity Credit Corporation, as on 31 March 2002. The profit before tax on disposal is zero.
Tate & Lyle has received a total of US$24 million (£16 million) in cash. The two companies agreed that the balance of the consideration of US$61 million (£42 million) will be secured by a first line over the non-working capital assets of Western and will be payable over a maximum of five years.
Tate & Lyle added that the proceeds of the sale will be used to reduce group debt. Included in the sale are Western's six beet factories in Nebraska, Wyoming, Colorado and Montana. The value at 31 March 2001 of Western's net assets was US$92million (£65 million).
Larry Pillard, Chief Executive, said: "This disposal marks another very important step in the repositioning of the group. Three years ago we identified that 25 per cent of our assets were not performing up to our expectations and this sale completes the disposal of those assets (the others being Domino Sugar sold in November 2001 and Bundaberg Sugar sold in July 2000).
Tate & Lyle is now well placed as a world leader in carbohydrate ingredients. Amylum in Europe and Staley in the Americas comprise a global cereal sweetener and speciality starch company, where management are confident of the long term growth prospects. Our sugar businesses support this growth with their profitability and strong cash generation."