HOLD S$5.27 STI : 2,807.44
Price Target : 12 months S$ 5.60
Sucrogen, Wilmar's Australian sugar subsidiary announced yesterday that it had entered into an agreement with administrators of Proserpine Sugar Mill to purchase the assets of Proserpine Co-operative Sugar Milling Association.
Proserpine had entered into administration after it was unable to secure sufficient funding from COFCO/Tully (Wilmar's rival bidder for Proserpine) to repay its existing debts.
Under the terms of agreement with the administrators, Sucrogen will purchase the mill for A$120m less working capital and settlement adjustments as well as operating costs and capex incurred from 31Oct11 to complete the acquisition. Sucrogen will also provide interim finance via a second commercial loan facility of A$15m. Approval for the transaction is required by creditors of Proserpine, with the meeting to be held on or before 12Dec11.
With Proserpine making a full year loss of A$22m (financial year ended 28Feb11), we expect a small drag on Wilmar's FY12 earnings if the transaction were to be completed by 31Dec11.
As the transaction is still subject to creditors' approval, we maintain our earnings forecasts and TP of S$5.60. Hold call is also maintained.
No comments:
Post a Comment