Newspaper article The Daily Mercury (Mackay, Australia)

Local Lawyer Pens Own Account of Sugar Brief

Newspaper article The Daily Mercury (Mackay, Australia)

Local Lawyer Pens Own Account of Sugar Brief

Article excerpt

Byline: Suzanne Brown McKays Solicitors

AT AN exclusive briefing for solicitors, accountants and financiers, Mackay Sugar chairman Andrew Cappello and CEO Jason Lowry outlined Mackay Sugar's plan of action to get the organisation back on track.

It was reassuring to learn that the company is only 45-48% geared and there are no current defaults on bank loans, or even pressure from financiers to reduce current debt levels.

There is no doubt there are challenges after a number of bad years, but the board wants to implement a plan to provide for sustainable financial management so Mackay Sugar can stay "grower owned" and "is not dictated to by banks".

We were told there is "no silver bullet"! - but the board is looking at all options and taking advice to, over the next few years, get Mackay Sugar into a better position. They outlined the strategy for this is threefold:

1. Asset sales to reduce debt, kickstart capital spend

The obvious assets available for sale include Mossman Mill, Sugar Australia and the Co Gen Plant. The board is currently negotiating with growers in Mossman to buy the mill. The sale of Mackay Sugar's interest in Sugar Australia is challenging, as they are a minority shareholder only holding 25%. The other 75% is held by Wilmar. Not many people want to buy a piece of the pie which gives them no real control.

There is varied and positive interest in the Co Gen plant. One option is to sell the income stream and keep the asset, but Mackay Sugar is exploring all alternatives. Advisory firm Kidder Williams estimates that Mackay Sugar could realise $100-140M from the sale. Whilst these assets sales should get Mackay Sugar in a better position "it is still not enough"!

2. Internal cost reductions and revenue enhancement for cashflow

The CEO spoke at length about Mackay Sugar's plans to cut costs by driving efficiencies in the mill and cane supply. They are aiming for a $10M saving this year. …

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