Monday 27 February 2017 by FIIG Research ripples_on_water Company updates

Mackay Sugar releases details of new strategic plan

Mackay Sugar engaged corporate advisory and investment banking company Kidder Williams to advise on the strategic direction and capital management of the company

Mackay Sugar (MS) confirmed the company has been advised to sell assets and charge a levy to growers, in a bid to retain ownership of its three Mackay mills and reduce its $212m debt.

We expect MS will meet its bond refinance obligation in April 2018.

MS has a significant asset base in marketable, easily divestible assets and many options to sell or monetise assets as needed. It has property, plant and equipment with a $321m book value, $140m in associated investments and a net asset position of $295m as at 1H16. 

The report, which has not yet been ratified by the Mackay Sugar board, recommended the co generation plant should be the first asset sold.

Further, the report also recommended the company come up with $144m as soon as possible, to inject back into capital expenditure and to pay down debt. Kidder Williams suggested that four independent directors join the five grower directors on the Mackay Sugar board.

As well as asset sales, it advised growers pay a $3 a tonne levy on cane headed to the mills.

More information will be provided in March.