Sugar plantation and milling facility
New strategic partner and debt refinancing
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The challenge
Our client were an independent group of investors (from a diverse
range of sectors including sugar, leisure, property and financial
services) seeking to refinance a major investment in sugar growing
and refining in East Africa. The project had commenced five years
previous as a rehabilitation of a pre-war productive site. As well
as rebuilding an industrial facility, an entire socio-economic infrastructure
was developed around the plant, which for 17 years had been disused
during the civil war.
The project was already generating over one million tonnes of cane
each year, but additional investment was being sought in order to
increase production capacity and maximise operating efficiency. At
the same time, substantial changes in the European Union (EU) with
regard to the importing and pricing of sugar had presented opportunities
for low cost producers in Africa.
The challenge was therefore to achieve a successful refinancing, whilst
identifying the best industrial partner to take advantage of the significant
emerging market opportunity in Europe.
Approach
The EU reforms, regarded as the biggest restructuring
of the sugar market in decades, promised to impose significant price
cuts (up to 40%) on European sugar producers along with the opening
of the EU market to “Less Developed Countries” under the
“Everything but Arms” directive.
However, as the details of the reforms were not yet finalised, it
was essential to align the project with a partner with the necessary
vision to see how low cost sugar producers would benefit. Working
with the client, Corven approached a number of major sugar producers
before quickly focusing negotiations with a single trade partner with
the appetite to invest in the project’s next stage of development.
As well as managing a complex sale process, Corven were engaged to
manage a refinancing of the project debt package mid-term, with a
view to ensuring a long-term financing structure to enable the project
to continue its pace of growth.
Results
- Deal completed with one of Europe's largest companies in the sugar sector before EU reforms finalised
- Joint-venture established with the incumbent project sponsors
- Existing banks reinvested in the project demonstrating their support
- Future development of the project accelerated through the addition of a significant trade partner
