| Sugar beet farmers are on the verge of a pretty sweet deal.
Sugar beet growers in a four-state area have reached a preliminary
agreement to purchase the Western Sugar Co. from Tate & Lyle North
America Sugars for about half the company's worth.
No purchase price was disclosed, but a source said it is $78 million.
If the price of raw sugar reaches a certain level, an additional $25
million would be paid over a five-year period. The book value of the
company was set at about $150 million.
Western owns and operates six sugar factories in Colorado, Nebraska,
Wyoming and Montana, in addition to other assets in the Rocky Mountain
area. In Colorado, the company's factories are in Greeley and Fort Morgan.
Richard Foose of Eaton is a member of the board of the Rocky Mountain
Sugar Growers Cooperative, which was founded earlier this year when Tate
& Lyle indicated its intent to sell Western.
Foose said he thinks the sale will go through.
"It all depends on the growers, but yes, I think it will
happen," Foose said. He and other beet growers are in the process of
harvesting this year's sugar beet crop. That will be complete sometime
next month and Foose said grower meetings will be conducted in December to
explain the purchase agreement.
Jerry Alldredge, soils and crops agent with the Weld County Cooperative
Extension office, said he's not sure the purchase is a wise move now.
"Farmers out there are looking for a good, cash crop, but I'm not
sure this is it at this point," he said. "With current sugar
prices as low as they are and with sugar coming into the country from all
over, I just don't see how this can work right now."
Tate & Lyle of London purchased the former Great Western Sugar Co.
out of bankruptcy for $20 million in 1986. The company and growers have
financed about $160 million in capitol improvements to existing factories
and new operations since then.
Randon Wilson, a Salt Lake City attorney for the Denver-based grower
cooperative, said the memorandum calls for a closing the sale sometime
during the next three to six months and is contingent on financing, grower
investment and approval by Western stockholders. The sale does not involve
Tate & Lyle's sugar cane processing operations or its Domino Sugar
marketing arm.
When the cooperative was formed, growers were told they would need to
provide $200 per acre to pay for one-third of the purchase price, with the
other two-thirds to be financed.
Wilson said Monday he could not confirm the selling price. About
170,000 acres of beets are grown in the four states. If $78 million is the
selling price, "that would translate into something less than $200
per acre" for the one-third needed up front from growers, Wilson
said. Negotiations continue with financial institutions to set up loans to
provide the other two-thirds needed for the purchase.
About 60,000 acres of beets are grown in Colorado, with almost half
those in Weld County. Ron Klaphake, president of the Greeley/Weld Economic
Action Development Partnership, said news of the agreement is good.
"That's wonderful," he said. "It's not only good news
for Greeley, but for the entire area. Now we've got some work to do to
finish the deal."
Rick Dorn of Hardin, Mont., president of the cooperative, said he was
pleased that Tate & Lyle provided the opportunity for growers to buy
Western Sugar.
"This will allow the growers to better control the sugar beet
industry in their areas and to receive increased profits for approximately
1,100 family farms in Nebraska, Colorado, Wyoming and Montana," Dorn
said. |