10th Oct 2006 09:18
Tate & Lyle PLC • 10 October 2006 Tate & Lyle to Exit Eastern Sugar Beet Processing Operations in Central Europeunder EU Restructuring Fund Tate & Lyle announces that Eastern Sugar ("ES"), its joint venture with SaintLouis Sucre SA (a subsidiary of Suedzucker AG) in which Tate & Lyle owns 50%,has today begun the consultation process with employees, beet growers and otherstakeholders with a view to renouncing its quotas in Hungary, Czech Republic andSlovakia and applying to the restructuring fund for compensation. This actionhas been taken following an extensive review of the impact of the new EU Sugarregime on the ES business. ES was formed in 1991 and consists of three separate operating companies inHungary, Czech Republic and Slovakia with a total of approximately 800employees. It operates five beet processing plants and holds combined annualquotas of 280,699 tonnes of sugar. As required under EU legislation, ES willsubmit restructuring plans to each Government to secure compensation from the EUrestructuring fund for the closure of all of these plants and the clearance ofthe sites. The ES consultation proposals envisage that the plants will cease processingbeets by the end of February 2007, when all of the current campaigns will havebeen completed, although sugar production will continue for several months atone Czech facility. If the consultation proceeds satisfactorily, a formalapplication for restructuring aid will be lodged towards the end of November2006, with the final decision on the grant of restructuring aid expected at theend of February 2007. Stanley Musesengwa, Chief Operating Officer of Tate & Lyle said "This step is adirect consequence of the EU Commission's reform of the sugar regime whichprovides a compensatory framework to encourage the early surrender of EU sugarquotas in order to bring EU sugar production, and particularly exports, withinthe limits imposed by the World Trade Organisation. "This is the right time to enter into this consultation as the business willinevitably face significant further pressure as the progressively negativeimpacts of reform of the sugar regime take effect on ES over the next threeyears. ES would also remain exposed to the possibility of further quota cutsbeing imposed by the EU across the industry in the event that the voluntarysurrender of quota is not successful in obtaining a balance of supply and demandin the EU sweetener market. The EU Commission is monitoring the working of therestructuring fund and will deliver a report on progress by the end of 2008. "ES's achievements in Czech Republic, Hungary and Slovakia have been madepossible by the hard work and ingenuity of our employees and the support of ourfarmers and suppliers. We are very mindful of the impact on our workforce andbeet growers, whom we thank for their commitment and dedication over the lastfifteen years. We have achieved an excellent start to our beet campaign thisyear in all of the ES locations and we are sure that we can rely on thecontinuing support of our employees and suppliers as we all adapt to therealities of the new EU sugar regime." FINANCIAL EFFECTS Tate & Lyle recorded an operating profit of £10 million from its share of ES inthe year ended 31 March 2006, the last full year before the reform of the sugarregime. Tate & Lyle's share of fixed assets at that date was approximately £19million. Subject to the availability of sufficient funds, compensation from the EUrestructuring fund is payable at EUR 730 per tonne of quota surrendered. Thisamounts to a gross, pre tax value of £139 million (EUR 205 million) for 100% ofES's quota. The EU regulations governing surrender require that a proportion ofthis amount is allocated to beet growers and machinery contractors. This must bea minimum of 10% of the total and a number of precedent transactions have beenconcluded at or very near that level. The likely final value of compensationpayable to ES cannot be determined with any degree of accuracy until theconsultation process has been concluded with all stakeholders and the finalredundancy, site decommissioning and associated costs are known, likely aroundthe end of November 2006. A further announcement will be made when appropriate. Under the regulations, 40% of the compensation will be due to be paid in June2008 and 60% in February 2009. END CONTACTS Mark Robinson, Director of Investor Relations Tel: 020 7626 6525 or Mobile: 07793 515861 Rowan Adams, Director of Corporate Communications (Press) Tel: 020 7626 6525 About Tate & Lyle: Tate & Lyle is a world leading manufacturer of renewable foodand industrial ingredients. It uses innovative technology to transform corn,wheat and sugar into value-added ingredients for customers in the food,beverage, pharmaceutical, cosmetic, paper, packaging and building industries.The Company is a leader in cereal sweeteners and starches, sugar refining, valueadded food and industrial ingredients, and citric acid. Tate & Lyle is the worldnumber-one in industrial starches and is the sole manufacturer of SPLENDA£Sucralose. Headquartered in London, Tate & Lyle is listed on the London Stock Exchangeunder the symbol TATE.L. In the US its ADRs trade under TATYY. The Companyoperates more than 65 production facilities in 29 countries, throughout Europe,the Americas and South East Asia. It employs 7,000 people in its subsidiarieswith a further 4,800 employed in joint ventures. Sales in the year to 31 March2006 totalled £3.7 billion. Additional information can be found on this websitewww.tateandlyle.com. SPLENDA£ is the trademark of McNeil Nutritionals, LLC Copyright Business Wire 2006Related Shares:
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