| "There's no reason to be concerned. The company's
been working on negotiating with creditors for a year now, and these
efforts are now being made public." - Russ Fullmer
Holly Sugar Agriculture Manager Russ Fullmer addressed concerns at a
Kiwanis "top growers" luncheon Thursday about a Reuters news
service announcement that Imperial Sugar Co. was considering a Chapter 11
filing as a restructuring option
Reuters reported that Imperial received an interim waiver for a
December interest payment and was in talks with creditor groups because it
was not in compliance with certain financial covenants under its senior
credit agreement.
The company said its net loss for the quarter ending Sept. 30 was $37.1
million, or $1.15 per diluted share, compared with a loss of $8.6 million,
or 27 cents, in the corresponding period last year. The results include
after-tax charges of $17.9 million, or 55 cents per share, related to
discontinuation of sugar beet processing at two factories and refining at
these plants.
The story continued, "gross margin in the quarter decreased to
$19.4 million, or 4.2 percent of net sales, from $39.9 million, or 8.2
percent net sales, reported in the same period a year ago. The decrease
was attributed to significantly lower sale prices for refined sugar, as
well as, higher energy costs, which more than offset benefits from lower
raw sugar costs."
Fullmer told the Sidney Herald that very low sugar prices had put all
sugar companies under financial strain and that this restructuring was a
financial strategy to keep the company strong.
"There's no reason to be concerned. The company's been working on
negotiating with creditors for a year now, and these efforts are now being
made public," Fullmer said.
The great majority of financing for our company purchases comes from
the bond market, Fullmer said. "This is now listed as debt. By
converting the bond debt load into stocks in the company, Imperial can go
from a company highly leveraged into one that is stronger and more stable.
The plan is to take a debt load of $250 million and convert it into
stocks, which will then save the company several million in interest
payments. That will allow Imperial to survive in a very down sugar
market."
Fullmer said Imperial "definitely has enough money now to continue
to pay suppliers and venders, and to make grower payments. No one needs to
worry that we won't pay our bills. It's business as usual."
Fullmer added that the recent news would not affect the current
negotiations involving local growers' attempts to purchase Holly. |