Collapsed sugar mill tipped to find buyer as agribusiness consolidation continues

The sugar industry is set for further foreign takeovers, with bids expected for MSF Sugar, the 125-year-old Queensland raw sugar grower, and a Prosperine sugar mill that collapsed on the weekend after shareholders rejected takeover offers for the company.

KordaMentha has been appointed voluntary administrators of the Prosperpine Co-operative Sugar Milling Association.

KordaMentha was appointed after shareholders rejected a takeover bid by COFCO valuing it at around $120 million. Any takeover offer required 75% shareholder support. Final bids are reportedly due to the administrators within days.

Prosperpine cane farmer Gary Simpson told ABC a decision on the mill should be made quickly. “As time goes on, our equity’s diminishing so hopefully sooner, whether it be Sucrogen or COFCO, the administrator will sell it for whoever’s the highest bidder I suppose,” he said.

The chief executive of the industry body Canegrowers, Steve Greenwood, told The Age this year’s sugar crush would fall by four million tonnes to 28 million tonnes of cane, but the industry would be boosted by sugar prices of more than $US500 a tonne.

Meanwhile listed sugar company MSF, which entered a trading halt yesterday citing an announcement on a “material change of control”, is expected to announce today or tomorrow that it has agreed to a takeover offer from its 22% shareholder,Thai sugar company, Mitr Phol.

Other potential bidders are said to be the state-owned China Oil and Food Corporation (COFCO), which owns Tully Sugar, and Singapore’s Wilmar, which owns CSR’s sugar division, Sucrogen. Both companies had made unsuccessful bids for Prosperine. Other potential suitors are believed to be international giants Bunge and Cargill.

MSF is Australia’s third-largest producer of raw sugar with about 660 growers, and says on its website its future “centres on being an efficient, reliable, high-quality supplier of sugar to international markets particularly the Asian region”.

“Supplying the global sugar industry is a challenging and volatile business. As a relatively small player on the international stage, we must focus on getting our products to market quickly and efficiently,” it says. MSF began operations in 1886 as a juice mill, and listed as a public company in 1956.

The company, which recently changed its name from Maryborough Sugar Factory, has four sugar mills, water rights, and investments in Sugar Terminals Australia.

It is expected to attract about $4.50 per share, having last traded at $3.40 per share.