Gledhow Sugar Company weighs up takeover bids

Gledhow Sugar Company’s creditors will need to wait another three months before a preferred bidder is selected.

The company has been in elective business rescue since March this year and has fielded a number of offers for partial funding and full purchase as part of the business rescue process.

Four offers were initially considered, of which two – Associated British Foods (ABF) and Lluvia Holdings – remain, alongside a new offer from the Ushukela Consortium.

After showing interest in submitting an offer, Ushukela Consortium outlined their terms on October 12, four days before a creditor voting meeting was due to be held.

As a result of the new offer and to give a fair chance for other offers to be updated, business rescue practitioner (BRP) Harry Spain asked creditors for a postponement of three months so that financial due diligence could be done.

That request was granted during a virtual meeting held on Monday.

In the due diligence period, Spain will assess the viability of the offers for Gledhow, as well as confirming that the financing behind them is legitimate.

Creditors also requested the services of a second BRP to help during the three month period so that final deadlines are met ahead of a potential takeover.

Spain said he was in the process of finding another BRP, while a negotiation for three months of further post commencement financing (PCF) is also ongoing.

The Gledhow Mill has so far been able to continue its work processes without a delay, he said.

So who is looking to take over Gledhow? ABF’s original offer, made in June, was to buy Gledhow for R1 and repay creditors up to R520-million.

Given the delay in acquisition however, the company has revised its offer and asked for time for further due diligence to be done on the increased risks associated with a takeover.

No updated financials are currently available. ABF is the parent company of Illovo Sugar and is the world’s second largest sugar producer.

Lluvia’s initial offer was a total package of R590-million, which included a R10 000 payment to the shareholders for full ownership of the business.

Secured creditors would be paid in full, while a stock financing facility could be made available to help during the rescue process.

Given the delays, Lluvia said it would welcome a chance to ‘reposition its offer’, the exact details of which are unclear.

Lluvia is a sugar distributor based in Cape Town.

The final offer came from the Ushukela Consortium, which is made up of Ushukela Milling, Kenyan company the Chatthe Group and Sokhela Sugar.

Ushukela’s offer is full purchase for R1 with an initial shareholders loan of R187-million to pay secured creditors, after which working capital insured by the Chatthe Group could be raised.

Once shareholding is acquired, Chatthe would inject a further R293-million to settle PCF creditors in full and 45% of pre-commencement creditors.

It is understood, however, that an amount of R370-million would be needed to settle those debts. Further clarity is expected.

Gledhow’s business rescue documents can be found at gledhowsugar.com.

Follow The North Coast Courier on Facebook, Twitter, Instagram & YouTube for breaking news

Telegram Broadcast Service: https://t.me/joinchat/yJULuN8NaCs5OGM0