Sugarland, Texas, 15 Oct - Imperial Sugar Company today announced that it has entered into preliminary discussions with Louisiana Sugar Refinery, LLC (LSR) to participate in the construction and operation of a new state-of-the-art refinery by LSR.
LSR is a 50-50 joint venture between Minneapolis-based Cargill and Sugar Growers & Refiners, Inc. (SUGAR), a Louisiana cane sugar marketing cooperative.
The discussions with LSR include Imperial’s participation in the joint venture and the contribution of its Gramercy, La. sugar refinery in exchange for a one-third interest in the venture. The parties are exploring the synergies of co-locating a new refinery adjacent to the existing Gramercy facility. Imperial’s Port Wentworth, Ga. refinery would not be part of the LSR venture.
The discussions contemplate that the new refinery will take advantage of current infrastructure and operational support. Benefits to all partners would include utility, site infrastructure and personnel synergies by co-locating the refineries and reductions in the cost of constructing and operating the new refinery. Imperial would retain the small bag packaging assets at Gramercy to supply its important retail and foodservice business.
“We are exploring with LSR the benefits of a combined effort in this construction project among three industry leaders which builds upon our successful long-standing relationship with the sugar cane growers and mill owners who belong to SUGAR,” stated John Sheptor, president and CEO of Imperial Sugar. “SUGAR’s growing and milling experience along with Imperial’s and Cargill’s refinery and marketing expertise would result in a more efficient supply chain that integrates raw sugar supply, sugar processing and product distribution to new and existing customers.”
“A potential strategic alliance with LSR would provide economies of scale while providing a larger integrated network to the marketplace. It would also allow us to secure sufficient raw sugar supply from LSCPI for Gramercy while the refinery is being built and also benefit the expanded joint venture in the longer term. With a newly strengthened platform in our core business, we would then be able to refocus our efforts to further leverage new business and product development in the retail, organic and Mexican markets.”
There can be no assurance that the discussions with LSR will result in the completion of a transaction. Completion of a transaction will require negotiation of definitive agreements and the approval of the boards of directors of each of the parties.