Deal in the works for troubled sugar firm

G E R M A N - B A S E D s u g a r manufacturer Nordzucker AG could grab a strategic stake in cash- strapped North Queensland miller Mackay Sugar.

Mackay Sugar confirmed on Tuesday it had received a non- binding indicative proposal for recapitalisation from Nordzucker and had agreed to an exclusive dealing period until the end of December.

If successful, the deal will inject cash into mill improvements and repayment of a $ 2 per tonne levy to growers.

Canegrowers chairman and Mackay Sugar supplier Paul Schembri welcomed the approach.

“This investment proposal presents an opportunity for Mackay Sugar to stabilise its business and ensure a financially sustainable and secure future for the region,” Mr Schembri said.

“We welcome the interest of such a highly reputable and world- class company in our industry and our region.

“Growers have been to hell and back in the past few years, worried about the future of the company, because without a viable mill, there can be no Mackay sugar farming community.

“Morale has been low as we’ve battled problems with milling performance and storm clouds over the company’s viability.

“There is now light at the end of the tunnel, reminding us that we are an industry worth investing in and building.”

Mackay Sugar is Australia’s second- largest sugar milling company, with four operating raw sugar mills, three in Mackay at Racecourse, Marian and Farleigh, and another at Mossman.

The four mills produce about 800,000 tonnes of raw sugar annually with revenues supported by production of refined sugar, molasses and renewable energy.

Mackay Sugar holds a 25 per cent interest in Sugar Australia, a sugar refining joint venture in Australia and New Zealand.

The indicative proposal has been endorsed by the Mackay Sugar board and remains subject to financial, regulatory, legal and shareholder- contingent conditions.