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NEW
YORK (Dow Jones)--Emerging from a bitter spell that put the company under
Chapter 11 Bankruptcy protection, Imperial Sugar Corp.'s (IPRLQ) president
is cautiously optimistic about the industry's prospects in the next two
years.
"The
low prices and big supplies have wreaked havoc on the industry. But the
recent reduction in acreage planted and the weather will probably help
prices in the next couple of years" said James C. Kempner in a
telephone interview with Dow Jones Newswires late last week.
Imperial,
which came out of Chapter 11 last week, is counting on recent developments
that may trim supplies in the domestic market to turn around its fortunes
after battling with refined sugar prices near 30-year lows for the last
couple of years.
Counting
on an annual consumption growth of 1.5%-2%, Imperial expects to refine
roughly 50 million hundredthweight units, or about 2.5 million short tons
of refined sugar in 2001-02. U.S. production as a whole is forecast at
8.405 million tons of sugar in 2001-02, down from an estimated 8.622
million tons in the current crop.
"We
have deleveraged significantly and reduced costs," by actions such as
the recent sale of its Michigan operations to a group of growers
cooperatives, said Kempner, who's been Imperial's president and CEO since
1998.
The
company is also trying to sell the real estate vacated by the shutdown of
two factories in California last year. He pegged the sale price for both
properties at around $25 million to $30 million. The firm was especially
hurt by the energy crisis in California as it used to process sugar beets
in factories in the state.
Last
February, Imperial also signed a definitive agreement to sell its Diamond
Crystal Brands nutritional products business to Hormel Foods Corp. (HRL)
for $65 million cash.
For
the fiscal year ended Sept. 30, 2000, Imperial Sugar posted a loss of
$1.07 a share, compared with the previous year's loss of 57 cents a share.
At the time, the company listed assets of $1.1 billion and liabilities of
$775.1 million, including $456.4 million in debt. In terms of annual sales
of roughly $1.8 billion, the company ranked 20th in the U.S. food
industry.
Before
the recently announced restructuring, the company's shares were trading at
8 cents each in the over-the-counter market.
Domino
Deal May Shift Imperial's Sugar Sourcing
Commenting
on the recent purchase of Domino Sugar by a group led by the Fanjul
brothers of Palm Beach, Fla., Kempner said that while U.S. raw sugar
output won't be altered significantly by the transaction, Imperial may
need to look for different sources for the raw material.
The
combined operation will be known as Domino Sugar, and will be 61%-owned by
the Fanjuls, while the Sugar Cane Growers Cooperative of Florida will own
the remaining 39%.
"If
all of Florida raws become captive to the refineries owned by the Fanjuls
and the cooperative, that sugar won't be available for sale...we may need
to look for different sourcing" which could include the
tariff-reduced sugar import the U.S. is obligated to purchase under World
Trade Organization rules, said Kempner, who will retain his post under the
new corporate structure.
In
1999, Imperial imported 140,730 tons of sugar from the world market,
through the tariff-reduced quotas approved under World Trade Organization
rules.
As
to the direction of the Farm Bill, expected to be in place by next year,
Kempner reckoned it's still too early to say what the final bill will look
like, as there are currently two proposals being contemplated in
Washington.
But
he did say that if the sugar policy is to stay in its present form -
restricting imports and keeping a price support for growers - he favors
marketing allotments, in which suppliers are assigned a fixed amount of
sweetener they can bring to market, as advocated by the American Sugar
Alliance.
Kempner
declined to give the identity of the likely candidate to be Imperial's new
chairman, who will take over after the company's restructuring.
However,
trade sources said the job is likely to go Robert J. McLaughlin, a
co-founder in 1982 of The Sutter Group, a management consulting company
that focuses on enhancing shareholder value.
Previously,
McLaughlin was President and Chief Executive Officer of Fibreboard Corp.,
a manufacturer of lumber, plywood and paper products, which is traded on
the New York Stock Exchange.
Besides
McLaughlin, the newly selected directors include Gaylord O. Coan, James J.
Gaffney, Yves-Andre Istel, James A. Schlindwein and John K. Sweeney.
The
new board has received favorable reviews so far, even from key
competitors.
"They'll
be a force to reckon with," said Jorge Dominicis, spokesman for
Florida Crystals, a wholly owned by the Fanjul brothers, and now the third
largest sugar marketer in the U.S.
-By
Marvin Perez, Dow Jones Newswires;
201-938-2031;
marvin.perez@dowjones.com
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