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Mackay Sugar to acquire Mossman Central Mill for $26.4m

FBR Staff Writer Published 01 May 2012

Mackay Sugar, Australia's leading sugar milling company, has entered into an agreement to acquire the milling and related assets of Mossman Central Mill for A$25.3m ($26.4m).

The acquisition is a part of the company's strategy to expand the operations and strengthen its core business.

Mackay Sugar chairman Andrew Cappello said this is a positive step for Mackay Sugar as it presents further cane expansion opportunities and will increase the company's sugar production.

"We will incentivise cane production and expect a 25% increase in cane supply in the first four years," Cappello added.

Under the agreement, the milling and related assets will be acquired by Mackay Sugar through the issue of approximately A$12m ($12.52m) in Mackay Sugar shares and refinancing A$13m ($13.56m) in debt. The shares, which represent approximately 3.3% of the issued capital of Mackay Sugar, will be held by Mossman Central Mill.

The transaction, which is subject to a number of conditions, is expected to be completed on 1 June 2012.

The Mossman Mill, which is located approximately 75km north of Cairns, Australia, is supplied with cane from approximately 7,300ha. The mill is designed to crush nearly 1 million tons of cane per annum.

Mackay Sugar operates three mills in Mackay, Queensland, Australia, which are supplied with cane from over 70,000ha. The company is also constructing a A$120m ($125.23m) cogeneration plant in Mackay, which is to be completed by February 2013.