Stockbrokers predict end of Irish Sugar
The company will weigh up the impact of the decisions before deciding on the best way forward but said it would continue to produce sugar for as long as it was viable.
Liam Igoe of Goodbody Stockbrokers said the agreement means that Irish Sugar, part of Greencore, is likely to cease operations.
The company may continue to manufacture sugar next year and possibly in 2007, but the time limit to capture the maximum compensation package then runs out.
Greencore’s compensation will comprise its share of the restructuring fund, the gross amount of which will be €145m. At least 10% of this is to be provided to beet growers. The final percentage may not be decided until sugar production ceases in one or two years. Greencore will therefore receive €130m, less whatever additional percentage is agreed, plus proceeds from assets net of redundancies, he said.
Paul Meade of NCB Stockbrokers said Greencore could process sugar beet until 2007 and stillsecure the maximumrestructuring payments.
“We believe Greencore will opt to exit the industry and focus efforts on growing their British convenience food business,” he said.
Davy Stockbrokers’ John O’Reilly said the agreement will give Greencore at least one more year’s cash-flow from sugar production than seemed likely when the reform proposals were published last June, because the maximum amount available under the restructuring package is available for two production years, not one as originally proposed.
“The net cash receipt for Greencore in a closure situation cannot be calculated precisely at this point but it could amount to seven or more times last year’s operating profit in sugar,” he said.
