| The Rocky Mountain Sugar Beet Growers Cooperative can
purchase Western Sugar Company from Tate and Lyle of London, England, for
$78 million, the attorney representing the cooperative said Tuesday.
Attorney Randon Wilson said the cooperative and Tate and Lyle have entered
into a memorandum of understanding. Wilson said the memorandum is similar
to a letter of intent.
"We have agreed on a purchase price," said Wilson, confirming
rumors that the purchase price will be $78 million. Wilson noted that the
book value of the company is an estimated $150 million.
Included in the purchase will be the entire Western Sugar Corporation.
Wilson said that includes depots and facilities, and all six factories in
Lovell, Billings, Mont., Greeley and Fort Morgan, Colo., as well as
Scottsbluff and Bayard, Neb.
"They have a big variety of assets including factories, a lime
quarry, water rights, trucks and land surrounding the factories,"
Wilson said.
Tate and Lyle will retain their sugar cane operations and Domino Sugar
marketing firm.
"We are working toward preparing a definite agreement that spells
out the terms," Wilson said.
"There will be a lot to do now."
Wilson said the next step is to meet with the bankers and line up
funding for the growers to purchase the company. "I think the
growers' share is going to be less than the $200 an acre we originally
predicted," Wilson said. "But we have to meet with the bankers
and see what they will loan us."
Letters were mailed to growers earlier this week, and packets outlining
the proposal have been sent to bankers.
The attorney said environmental experts, engineers and appraisers would
be called in to make further evaluations of the company. A market analyst
will also be called in to make an evaluation of the direction of sugar
prices and to perform a market study.
"We have a target of closing on the purchase during the first
quarter of 2001," Wilson explained. "We will probably try to
hold grower meetings in November, December and maybe January."
First every detail has to be finished in order to provide growers a
prospectus.
"It takes awhile to get the prospectus finished and distributed to
the growers," Wilson said. "We want to have every detail of the
deal in the proposal." Once the prospectus is completed, Wilson said
the growers would be encouraged to contact their own banks for funding.
"They will each have to get a new loan secured by their delivery
rights to purchase their share of the company," he said. The
cooperative will withhold their annual loan payment from their checks and
mail it to the bank.
Growers who have a difficult time obtaining funding from their bank
could be funded by the cooperative, Wilson said.
"We are planning a project to help those growers," he
explained. "We are organizing a finance company that can loan money
to growers who can't get financing elsewhere. We are still working out the
details."
Wilson is optimistic that the agreement is a good arrangement for the
growers.
"In the best and the worst of times, the best thing is being able
to have some control over your own industry," he said. "I want
to encourage the growers that we are buying the company at the right
price, and we should be able to make a go of it." |