A message from the Proserpine Mill

 Proserpine Sugar Mill’s Acting CEO Ian McBean has this message for growers:

 “There is no guarantee that Mackay Sugar can or will make an offer for Proserpine, let alone a superior offer to the one from Sucrogen. For Mackay Sugar to encourage Proserpine members to vote “no” to the Sucrogen offer in the absence of another offer is irresponsible. Mackay Sugar is asking Proserpine members to sacrifice the real offer that would return approximately $25 million to members for nothing in return,” Mr McBean said.

 “What Mackay Sugar has done is outline a concept that would still result in our members losing control of their Mill for less up front cash and which would take more time and money to deliver, which the Mill cannot afford,” he said.

 Mr McBean wants growers to appreciate there are significant hurdles to be overcome before what Mackay Sugar has outlined could be even be implemented. These would include 75 per cent of Proserpine Mill members agreeing to convert their Cooperative to a public unlisted company; at least 75 per cent of Mackay Sugar shareholders agreeing to sell 25 per cent of their company to the French commodities trader, Louis Dreyfus; additional approvals that may be required from Mackay Sugar shareholders to issue shares to Proserpine growers; and Mackay Sugar being able to secure the necessary finance.

 “This will all take considerable time and passes all of the risk, which is significant, to the Proserpine growers,” Mr McBean said.

 “Mackay Sugar is asking Proserpine members to put everything at risk and vote “no‟ to the Sucrogen offer but cannot provide a firm alternative that is superior to the offer on the table.”

 Mr McBean said the Proserpine Mill was required to reduce existing debt by $35 million by 31 October 2011.

 “The Proserpine Board has run an orderly process to repay debt and secure the future of the Mill by the end of October. Mackay Sugar cannot commit to provide a superior offer to meet that timeframe,” Mr McBean said.

 Mr McBean pointed out that Mackay Sugar had been given the same opportunity as other prospective investors and that claims they had been “locked out” of discussions were untrue.

 “Mackay Sugar were given the same opportunity as Sucrogen and seven other potential investors but chose to opt out – we can only assume because they thought Tully Sugar was a better option,” he said.

Mackay Sugar mulls over meeting with Proserpine cane growers

 Chairman of the Mackay Sugar board Andrew Cappello came here last week, to gauge the appetite of Proserpine growers for a potential merger with Mackay. Now, after Thursday’s meeting Mr Cappello says he has a fair idea of what growers want.

 “We have a lot of contacts with the grass-roots growers and we did what they requested, which was to come up and provide the framework to what our model would look like. Yes, it’s difficult for them at this stage to compare this with the offer from Sucrogen, but this is what our business model would be and that’s what they have to decide on,” Mr Cappello said.

 “The clear message we got was they want some sort of guarantee that we could sure up their financial position if they voted the Sucrogen offer down. We would like to guarantee them 100 percent but it’s still early days. As we move closer to the voting date I’m sure we will be able to provide them with more certainty."

 Mr Cappello denied claims that Tully took precedence over Proserpine by those who believe Mackay Sugar has come forward with too little too late.

 “Tully came on the scene earlier than Proserpine but it was always our intention to involve the three mills in one larger milling company,” he said.

 Mr Cappello maintained that at this stage there would be no cash offer comparable to the $115million Sucrogen bid, saying, “Our offer is about the merger”.

 “Our interest in Proserpine is always about involving the growers. It’s a much more stable business model, where your suppliers are the owners."

 Mr Cappello said if nothing else, the visit by the board had served to dispel any misinformation and give growers something else to think about.

 “I think there’s a reasonably good acceptance of our model. The growers can see there’s a lot of upsides for them in our offer, eg the cane payment formula and also in the furfural earn out – as the furfural plant proves itself they will be able to acquire more value. However there are still some growers who want to compare eggs with eggs,” he said.

No offer from Mackay Sugar for Proserpine Mill

Proserpine Sugar’s chairman of the board Lou Raiteri says claims made by Mackay Sugar regarding the mill sale process are misleading.

Yesterday afternoon Sucrogen officials came to town to meet with growers at the entertainment centre. There will be another meeting this morning.

“As part of the process to find an equity investor,. our advisers approached a number of parties including Mackay Sugar to gauge their interest in investing in Proserpine Mill.

“Mackay Sugar has never made an offer for Proserpine Mill for the board members to present to our members.

“Mackay Sugar is currently engaged in a high profile and highly competitive bidding war for Tully Sugar with no certainty it will be successful. Mackay sugar’s argument for an all-Australian sugar milling group is highly reliant on them making a successful bid for Tully Sugar.

Mr Raiteri says by comparison, Wilmar International has made a firm cash offer of $115m for Proserpine Mill.

“After a rigorous review process, the board believes the offer from Wilmar would provide members with greater certainty and a range of benefits,” he said.

Sucrogen’s CEO Ian Glasson told growers yesterday this sale was far bigger than just the purchase of the mill.

“We will build a strong industry for future generations. It doesn’t stop with the purchase of the mill,” Mr Glasson said.