| Mon 17 May 2004, 10:24 | | SALE OF GLEDHOW SUGAR MILL, REFINERY AND CANE GROW |
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ILLOVO SUGAR LIMITED - SALE OF GLEDHOW SUGAR MILL, REFINERY AND CANE GROWING
ESTATES TO A BEE COMPANY AND CAUTIONARY ANNOUNCEMENT
Illovo Sugar Limited
(Incorporated in the Republic of South Africa)
Company registration number 1906/000622/06
JSE Share Code: ILV
ISIN: ZAE000003547
("Illovo Sugar" or "the Group")
SALE OF GLEDHOW SUGAR MILL, REFINERY AND CANE GROWING ESTATES TO A BEE COMPANY
AND CAUTIONARY ANNOUNCEMENT
1.0 Introduction
Shareholders are advised that Illovo Sugar has entered into a sale
agreement with Grand Bridge Trading 40 (Proprietary) Limited, which is a
broad-based Black economic empowerment ("BEE") company ("Grand Bridge"), in
terms of which Illovo Sugar will, subject to a condition precedent, sell
its interests in the Gledhow sugar mill and refinery and the associated
cane growing estates ("Gledhow"), (collectively "the transaction").
The transaction will result in a BEE company holding a major sugar asset
and will secure BEE participation in the SA sugar milling industry.
This announcement sets out the salient terms of the transaction and the
empowerment initiative as required by the JSE Securities Exchange South
Africa ("JSE") Listings Requirements for a transaction of this nature being
a category three transaction.
2.0 Background And Rationale
Illovo Sugar, which is the largest sugar producer in Africa, has an active
BEE programme and this transaction is further evidence of its continued
efforts to promote sustainable broad-based Black opportunity and
empowerment.
Illovo Sugar is confident that the transaction will grant additional access
to the sugar industry to a wider section of the community.
3.0 Overview Of The Transaction
Grand Bridge will acquire the assets and liabilities of Gledhow, including
its associated agricultural properties, from Illovo Sugar as a going
concern. The consideration payable is R335 million and will be settled in
cash by Grand Bridge utilising a loan from the Land and Agricultural Bank
of South Africa. Illovo Sugar intends to utilise the proceeds thereof to
strengthen the balance sheet in preparation for future growth.
In order to achieve the broad-based empowerment intentions of Illovo Sugar,
the sale agreement stipulates that :
* the majority of the shares held by Grand Bridge should be drawn from
previously politically disadvantaged persons;
* equity participation of not less than 20% in Grand Bridge must be held
by or for the benefit of employees of Grand Bridge;
* the majority of the sugar cane producing agricultural land acquired
should be sub-divided into medium and/or small-scale farms and
allocated for acquisition by previously politically disadvantaged
persons.
The effective date of the sale is 1 June 2004 and is subject to the
approval of the Competition Authority. Shareholders will be advised once
this condition precedent is fulfilled.
Illovo Sugar will continue to manage the business for a period of five
years from the effective date.
Other than the above, the sale agreement contains the normal terms,
conditions and warranties expected for a transaction of this nature.
4.0 Financial Information
Illovo Sugar"s final reporting period closed at the end of March 2004 and
the publication of these results is scheduled for 19 May 2004.
Consequently, it would not be meaningful to disclose the financial effects
of the transaction based on outdated financial information. The financial
effects of the transaction will be disclosed to shareholders in terms of a
subsequent announcement, following the publication of the final results of
Illovo Sugar, and will be based on these final results. The financial
effects on the earnings of Illovo Sugar are not considered to be material.
5.0 Information On Grand Bridge
The major shareholders of Grand Bridge include The Sokhela Family Trust and
the Gledhow employees, with the balance held by Black community
organisations, businesses and individuals.
6.0 Information On Gledhow
Gledhow is located on the north coast of KwaZulu-Natal, adjacent to
KwaDukuza.
Annually, the mill crushes approximately 1.4 million tons of cane and
produces around 150 000 tons of sugar, constituting some 6% of South
Africa"s annual sugar production and a similar share of the annual sugar
output of the Illovo Sugar group. Utilising additional raw sugar brought
in from other sugar factories, the refinery produces about 160 000 tons of
white sugar per annum which is sold to industrial and consumer markets.
The properties include approximately 6 900 hectares cultivated to sugar
cane which yields around 300 000 tons of cane per annum.
Currently Gledhow employs 540 people in its agricultural and manufacturing
operations.
7.0 Cautionary Announcement
On the basis that the financial effects of the transaction are still to be
disclosed, shareholders are advised to exercise caution when dealing in the
shares of Illovo Sugar until disclosure in this regard is made.
Mount Edgecombe
17 May 2004
Sponsor:
Cazenove
Date: 17/05/2004 10:00:20 AM Produced by the JSE SENS Department
