A LIFELINE has been thrown to the debt-ridden sugar miller Mackay Sugar, with a German manufacturing powerhouse proposing to buy 70 per cent of the business.
Mackay Sugar, one of the few remaining Australian-owned sugar millers, is faced with soaring debt levels of up to $180 million with German company Nordzucker expressing interest in buying a share in late October.
It is a bitter-sweet proposal for the region’s growers, whose ancestors had toiled to build up the mill.
But Canegrowers Chairman and Mackay grower Paul Schembri said growers were aware of the severe financial predicament facing the miller, that had developed over some time.
He said crippling debt had reduced the ability for maintenance to be undertaken and in turn, the output of the mill.
“It just wasn’t sustainable. Prior to this year we had two years where cane was left in the field, the long season lengths were simply not sustainale for growers and they had lost a lot of morale. It had to be brought to a head,” Mr Schembri said.
“The milling performance and reliability had become very poor, below industry standards and the levels we had become accustomed to.”
Mr Schembri said growers and shareholders would have a vote on whether to support the deal in March.
“My view is certainly that as farmers, we see this is an opportunity that otherwise we wouldn’t exist, and all, including myself are disappointed that will lose equity that was built up by our fathers, grandfathers, great-grandfathers.
“But we are pragmatic that this is the only way forward and really an opportunity to stabalise the business and secure our future.
“The message to impart to growers is to try to get their head around the details and focus on the totality of the package.
“Importantly, our future will be in our hands.”
The Mackay Sugar board said in a release that it gave in-principle support to the non-binding proposal from Nordzucker.
There are still a number of obstacles to be cleared before the deal goes ahead, including agreement on the final share structure, Foreign Investment Review Board approval and approval from 75 per cent or more of Mackay Sugar grower shareholders.
Nordzucker is Germany’s second largest sugar refiner.
Mackay Sugar produces about 800,000 tonnes of raw sugar annually for the Australian market and for export.
A proposed sale of the company’s Mossman Mill will not form part of the deal.