| Sugar beet farmers will pay $65 million for Michigan Sugar
Co., under terms of a letter of intent signed with Texas-based
Imperial Sugar Co.
The farmers are part of a cooperative formed in August for
the sole purpose of exploring the purchase of Michigan Sugar,
which has facilities in Caro, Carrollton, Croswell and
Sebewaing.
The cooperative is called the Michigan Sugar Beet Growers
Inc.
On Monday, the cooperative began meeting with area sugar
beet growers to discuss the 2001 beet contract and the
cooperative buyout plan.
That plan includes a cash payment of $55 million upon
closing, deferred payments of $10 million and the assumption
of $18.5 million in industrial development bonds.
The deal will give Michigan Sugar Beet Growers ownership of
all four facilities and the equipment at those facilities.
"Response to our grower meetings was
exceptional," said Richard Maurer, chairman of Michigan
Sugar Beet Growers. "Growers are excited with the
opportunity to buy Michigan Sugar and control their own
destiny in the beet sugar industry."
"We are happy that we and our Michigan Sugar Co.
growers have been able to reach agreement on this important
transaction," said
James C. Kempner, president and chief executive officer of
Imperial Sugar, called the deal "a win-win
situation."
"As the new owners, the Michigan growers will be
better able to control their own future in the domestic sugar
industry," Kempner said.
Bob Braem, vice president of agriculture at the Caro plant,
said new ownership will not mean major changes in the way
things are done at Michigan Sugar.
"We're not planning any big changes," said Braem,
who has been with the company for 20 years. "We'll
continue to do things the way we've done them for years."
Michigan Sugar's Caro plant was built in 1899 and is the
oldest operating sugar beet factory in the United States. The
other plants opened in 1902.
Richard E. Leach Jr., executive vice president of the Great
Lakes Sugar Beet Growers Association, said contracting for
2001 has already begun. The association represents Michigan
Sugar's 1,400 growers in the Thumb area, central and
southeastern Michigan and Ontario, Canada.
"In just one week, more than 50,000 acres have been
contracted with the cooperative," Leach said. "We
are looking to contract 125,000 acres this year and with the
response we have had to date, we are optimistic that we will
reach our goal."
Leach said no money is being exchanged between growers and
the cooperative at this time.
"When the time comes to pay for Michigan Sugar, stock
in the grower-owned company will be sold for $200 per
share," Leach said. "Each share purchased will
require the grower to plant one acre of sugar beets starting
in 2002."
If the cooperative plans to plant 125,000 acres in 2002,
the stock offering would raise $25 million towards the
purchase price.
Leach said sugar beet growers will also be charged a
one-time fee of $50 per acre contracted to join the
cooperative. That would raise another $6.25 million.
"The rest of the money will come from term loans from
one or several lending institutions," Leach said.
Under terms of the letter of intent, Michigan Sugar Beet
Growers Inc. must secure financing and subscribed sugar beet
growers by Oct. 1 to complete the transaction.
In the event the closing is delayed beyond that date,
Imperial Sugar will manage the four Michigan Sugar facilities
and will market the refined sugar processed under a lease and
management agreement with the cooperative.
Following the sale, Imperial Sugar will continue to market
the refined sugar processed by Michigan Sugar under the
Pioneer Sugar label.
- Rob Clark is business editor for The Times. He can be
reached at 894-9642. |