Polish sugar giant sold off to France's Saint Louis Sucre
In a landmark sugar privatization, the government last week sold off the nation's largest sugar holding to Europe's fourth-largest producer, Saint Louis Sucre (SLS).
After months of delay and heated debate, the Treasury Ministry last week sold a 95% share in Slaska Spolka Cukrowa (SSC) for zl. 250 million ($55.5 million).
The deal will give SLS an 18% share of Poland's sugar production capacity, the third-largest in Europe. Under the agreement signed last week, SLS agreed to increase to zl. 250 million ($54 million) to cover the holding's debt and fork out zl. 155 million ($34.4 million) during the next five years to restructure and modernize its operations.
"I am happy that this transaction finally happened," said Pawel Jagiello, president of Pro-invest, the ministry's privatization adviser on the SSC sale.
The 95% bloc of shares in SSC will give the French a 51% share in each of the 16 mills that make up the holding. The remaining shares in each mill are held by the state treasury, sugar workers and sugarbeat farmers. Ministry and SLS representatives refused to comment on whether the agreement gave SLS first dibs on the purchase of shares in each holding.
SLS is France's second-largest sugar producer. In addition to seven mills in France, the company also has interests in mills in the Czech Republic, Slovakia and Hungary.
The agreement signed last weekend brings to a close more than a two-year effort to sell SSC. The holding's sell-off has been held up mostly due to a longstanding conflict over the direction of the privatization of Poland's sugar production industry. For more than a year, trade unions and some Solidarity Election Action (AWS) deputies have lobbied to keep the industry in Polish hands by creating a national sugar company, Polski Cukier. The government, meanwhile, has been pursuing strategic investors as part of a plan to pump much-needed cash into outdated technology and production facilities.
"We are very happy that we have this stage behind us," said Boguslaw Stec, SSC vice president. "We have been working toward this for the past two and a half years and finally the deal is signed."
The closure of the sale marks the beginning of the transfer of management to SLS. This week the company will assemble a transition team in Losiow, the headquarters of SSC. One stumbling block for the company may be coming to agreements with farmers who supply beets to SSC mills. A final sale last spring was initially delayed due to an ongoing stalemate in talks with beet growers supplying Slaska mills. When the impasse threatened to undermine the sale entirely, in the end the ministry completed negotiations on behalf of farmers.
According to a ministry press statement, in signing the deal with SLS, the government ensured that beet growers' interests were protected. "Making cooperation work with the new owner chosen by the treasury minister is the key challenge facing farmers," said Tadeusz Koziol, a farmer who headed up the beet growers' negotiating team.
In grabbing SSC, the French will acquire production facilities in one of Poland's major sugar beet basins. But the signatures on the dotted lines do not bring to a close the controversy over the sell-off.
The news of the deal sparked angry responses among supporters of the Polski Cukier concept. "I'm absolutely furious," said Roman Wierzbicki, chairman of the Solidarity Individual Farmers Union. Wierzbicki and other backers of Polski Cukier were counting on SSC's 16 mills being included in the national sugar concern. "I received assurances that decisions on all sugar privatizations would be postponed until the fate of Polski Cukier was settled."
This week ministry officials will have to defend the sale in a closed session of the Sejm's agriculture committee. In an emotional committee session last week, some deputies called on Treasury Minister Andrzej Chronowski to call off the SSC sale. However, according to Jan Wyrowinski, Freedom Union (UW) deputy from Torun, Chronowski defended the deal.
"The minister said he is sure that this is a good contract," Wyrowinski said.
While the SSC sell-off dashes hopes of a national sugar concern consisting of the majority of Poland's mills, the privatization deal does not mean an end to the Polski Cukier concept. Last week the government chose consultancy Pro-invest as its privatization adviser for Polski Cukier. Pro-invest served as the privatization adviser on the sale of SSC. According to ministry officials, Pro-invest will submit a feasibility study for Polski Cukier by March next year.
While under the government's privatization plan the Polski cukier concept would be limited to 16 mills, treasury officials last week stated that the concern might ultimately end up being significantly larger.
