Minister blocks SLS deal
By : Juliet D. Golden
Saint Louis Sucre's (SLS) eight-month bid to finalize its purchase of Slaska Spolka Cukrowa (SSC), the largest sugar holding in Poland, was called off last week when Treasury Minister Aldona Kamela-Sowinska refused to grant an extension to close the deal.
Under the privatization agreement signed between the ministry and SLS last November, the sale had to be closed by mid-July for it to be valid. However, since the beginning of the year the Interior Ministry (MSWiA) has failed to sign off on it, another prerequisite for its validity.
Kamela-Sowinska's refusal to prolong the contract means that SSC and its 16 sugar factories will likely be absorbed into the future national sugar holding, Polski Cukier.
This controversial outcome is driven by President Aleksander Kwasniewski's surprise decision two weeks ago to sign a new version of a bill passed by Parliament this spring. According to the law, all sugar mills not yet privatized when the law is entered onto the books will be absorbed by Polski Cukier. The law will come into effect on August 20.
Treasury Ministry officials cited Kwasniewski's signature on the new sugar bill as the chief reason for its backing away from the SLS deal. With less than a month to go before the sugar bill becomes law, ministry officials argued SLS stood little chance of resolving its half-year conflict with the MSWiA by that time.
"Prolonging the contract would have been pointless," said Beata Jarosz, a Treasury Ministry spokeswoman.
If SSC's sugar factories are included in Polski Cukier, the holding will command almost a 60% market share, with the other chunk being controlled by a smattering of foreign investors: the U.K.'s British Sugar and Germany's Nordzucker, Pfeifer und Langen and Sudzucker.
SLS' hold on SSC became tenuous when the Supreme Administrative Court (NSA) recently failed to rule whether the MSWiA was correct in withholding its approval for the privatization deal. A ruling against the Interior Ministry would have paved the way for Kamela-Sowinska to close the deal with SLS.
However, instead of issuing a ruling, the NSA opted to set up a commission to research whether the MSWiA's approval was necessary in the first place. That ruling is expected in the fall.
Also figuring into the final outcome was the recent merger between Sudzucker and SLS. At the end of June, the world's largest sugar producer, Sudzucker, announced it had clinched a deal to acquire 99.6% of SLS for O1.6 billion.
The prospects of SSC falling into German hands hit a raw nerve in Poland due in large part to its location in Silesia, once part of Germany until 1945.
"I am sure it did (have an impact)," said Patrice Saintherant, international development director at SLS.
Despite the setbacks, SLS is not giving up without a fight. Last week, the company filed a case against the Treasury Ministry in a Warsaw civil court in an effort to block the transfer of SSC shares to Polski Cukier until the NSA issues a decision later this year.
