CORAL
GABLES, Fla., Nov. 5, 2024
/CNW/ - Sucro Limited (TSXV: SUGR) (OTCQB: SUGRF) ("Sucro"
or the "Company"), an integrated sugar refiner focused
primarily on serving North American sugar markets, announced today
that Beta San Miguel, S.A. de C.V. ("BSM"), one of the
largest sugar refiners in Mexico
by volume and sales, has acquired subordinate voting shares from
the Company's controlling shareholder, SC Americas Corp. ("SC
Americas"), representing 15.93% of the voting and equity shares
of the Company. SC Americas, which prior to the transaction owned
approximately 67.5% of the voting and equity shares of the Company,
is controlled by Jonathan Taylor,
the founder, Chief Executive Officer and a director of the Company.
In ancillary transactions, BSM has granted the Company certain
first offer, first refusal and matching rights for the purchase of
raw and refined sugar exported by BSM from Mexico. Additionally, Sucro has appointed a
nominee of BSM to its board of directors and granted BSM certain
board nomination and pre-emptive rights under an investor rights
agreement. Jonathan Taylor and SC
Americas have also entered into a "hard" lock-up and support
agreement with BSM under which they have agreed, subject to certain
conditions, to tender a certain number of Sucro shares to BSM if
BSM makes a formal takeover bid for all subordinate voting shares
of the Company within certain defined periods in 2027 or 2028, or
to vote in favor of an equivalent alternative transaction.
Jonathan Taylor, founder &
CEO of Sucro, commented, "This strategic relationship with BSM
brings together two innovative companies with a shared vision for
growth and North American expansion. The transaction not only
underscores BSM's confidence in our business but also strengthens
our ability to serve the North American sugar market." Mr.
Taylor also added "While this transaction marks a critical time in
Sucro's growth and development, it also provides important
potential upside value if Sucro continues to execute on its current
operating plan. Following completion of this transaction, Sucro
management continues to own in excess of 60% of the voting and
equity shares of the Company, and we are extremely motivated and
focused on delivering value for all shareholders."
Patrik Palafox, Chairman of the
Board of BSM, added "This partnership with Sucro presents a solid
strategic rationale for BSM. We recognize the potential to create
value for both companies, by leveraging solid complementary
strengths and expertise that exist between us. We are enthusiastic
about the opportunity presented by Sucro's business plan, which
targets high-growth segments such as the Canadian market and the
U.S. Northeastern region. This alliance enhances BSM's position as
a more prominent player in the international market, further
strengthening our geographic diversification."
Share Purchase
Under a securities purchase agreement (the "Securities
Purchase Agreement"), BSM acquired 3,750,000 subordinate voting
shares from SC Americas on November 5,
2024 (the "Closing Date"), representing 15.93% of the
voting and equity shares of Sucro, at a price of C$9.00 per share. To effect the sale, SC Americas
converted 37,500 proportionate voting shares into 3,750,000
subordinate voting shares in accordance with the terms of the
proportionate voting shares. Following the sale, SC Americas
continues to own 121,441.02 proportionate voting shares,
representing approximately 51.6% of the voting and equity shares of
Sucro.
Sugar Supply Agreement
Under a sugar supply agreement (the "Sugar Supply
Agreement"), BSM has granted to Sucro certain first offer,
first refusal and matching rights on all of BSM's raw sugar export
quota and up to 75% of BSM's refined sugar export quota to
the United States assigned by the
Mexican Secretary of the Economy (subject to compliance with the
current suspension agreement entered into by Mexican sugar
producers/exporters with the U.S. Department of Commerce).
BSM has also granted to Sucro first offer, first refusal and
matching rights on all raw and refined sugar BSM may export outside
of the United States and
Mexico (after serving the Mexican
domestic market).
Lock-up and Support Agreement
Under a lock-up and support agreement (the "Lock-up and
Support Agreement"), Jonathan
Taylor and SC Americas have agreed to tender sufficient
shares to BSM to allow it to complete, at BSM's discretion, a
formal takeover bid pursuant to which it would acquire, when added
to its existing shares, at least 51% of the outstanding voting and
equity shares of the Company on a partially-diluted basis provided
that: (i) the formal takeover bid is for all outstanding
subordinate voting shares (including those issuable upon the
exercise or conversion of convertible securities) and is commenced
by BSM during specified periods in either 2027 or 2028 that is not
earlier than May 1 in each year; and
(ii) the price per subordinate voting share under such takeover bid
is not less than the Canadian dollar equivalent of nine-times
diluted comprehensive income from continuing operations per share,
as reported in Sucro's audited financial statements for the year
ending December 31, 2026, if the
takeover bid is commenced within the specified period in 2027, or
the Canadian dollar equivalent of eight-times diluted comprehensive
income from continuing operations per share, as reported in Sucro's
audited financial statements for the year ending December 31, 2027, if the takeover bid is
commenced within the specified period in 2028, in either case
subject to a minimum bid price calculated as the Canadian dollar
equivalent of eight- times average diluted comprehensive income
from continuing operations per share, as reported in Sucro's
audited financial statements (subject to permitted adjustments) for
the three most recently completed financial years, divided by two.
Jonathan Taylor and SC Americas have
also agreed to vote in favor of an equivalent alternative
transaction and any ancillary matters and to vote against any
acquisition proposal or other action or proposal made in opposition
to or competition with or which interferes with or prevents the
consummation of the potential BSM takeover bid or alternative
transaction. The Lock-up and Support Agreement does not contain any
right to withdraw in the event that a superior offer is made for
the shares of the Company.
The making of any takeover bid or alternative transaction is
in the sole discretion of BSM and there can be no assurance that
any takeover bid will be made or an alternative transaction will
occur.
Investor Rights Agreement
Sucro has also entered into an investor rights agreement (the
"Investor Rights Agreement") with BSM under which BSM
is entitled to nominate for election to the board of directors of
Sucro a percentage of directors that is not less than the
percentage of the voting and equity interest owned by BSM and its
affiliates in the capital of Sucro, and BSM has also been granted
pre-emptive and top-up rights to maintain, but not increase, its
voting and equity interest in the Company. The Investor Rights
Agreement also contains customary standstill restrictions on BSM
and a covenant of BSM that any shares it may acquire under a formal
takeover bid pursuant to, and from parties subject to, the Lock-up
and Support Agreement will be excluded for purposes of determining
whether "minority approval" of a second-step transaction (that
would be completed not more than 120 days after the expiry of the
takeover bid) has been obtained under Multilateral Instrument
61-101 - Protection of Minority Security Holders in Special
Transactions.
Appointment of BSM Nominee to Board
In connection with the transaction with BSM, Sucro has appointed
Patrik Palafox, BSM's nominee, to
the Company's board of directors as an additional sixth director.
Patrik Palafox has been the Chief
Strategy Officer of BSM since 2018 and the Chairman of the board of
directors of BSM since 2024. He has 28 years of experience in
finance, strategic planning and mergers and acquisitions, having
led transactions valued at over US$1.5
billion. He holds an MBA from the IESE Business School.
Special Committee Review and Board Approval
In connection with the transactions, a committee of independent
directors of Sucro (the "Special Committee") was formed
consisting of Andrew Ferrier
(Chair), Brian O'Malley and
William Billings, who after
reviewing and considering such information and matters determined
to be necessary and relevant, and with the advice of independent
legal counsel, unanimously determined that the transactions to
which Sucro is a party are in the best interest of the Company and
unanimously recommended approval thereof by the full board.
The entering into by Sucro of the Sugar Supply Agreement and the
Investor Rights Agreement has been approved unanimously by the
board of directors of the Company (with Jonathan Taylor abstaining from voting)
following the recommendation of the Special Committee.
Early Warning Disclosure
On the Closing Date, BSM acquired 3,750,000 subordinate voting
shares (the "Acquired Shares") from SC Americas,
representing 15.93% of the voting and equity shares of Sucro, at a
price of C$9.00 per share for total
consideration of C$33,750,000. The
transaction was completed by private agreement and did not occur on
any stock exchange or other securities market. None of the parties
to the Securities Purchase Agreement are, and none of the Acquired
Shares were acquired from or were offered to be acquired from,
parties located in any province or territory of Canada. The value of the consideration paid
for the Acquired Shares, including brokerage fees or commissions,
was not greater than 115% of the market price of the Acquired
Shares as determined in accordance with Section 1.11 of National
Instrument 62-104 – Take-Over Bids and Issuer Bids.
Immediately prior to the transaction, BSM did not beneficially
own or exercise control over any shares of the Company. Upon
completion of the transaction, BSM beneficially owns 3,750,000
subordinate voting shares, representing 15.93% of the voting and
equity shares of Sucro (and approximately 35.5% of the
subordinate voting shares, without considering the proportionate
voting shares which are convertible into subordinate voting
shares). BSM has advised the Company that BSM has acquired the
Acquired Shares for investment purposes. BSM will evaluate its
investment in Sucro on an ongoing basis and may increase or
decrease its holdings in Sucro, including pursuant to a formal
takeover bid in accordance with the Lock-up and Support Agreement,
and otherwise engage with the Company in the future, subject to
contractual restrictions set out in the Investor Rights Agreement,
market conditions and other relevant factors. The address of
BSM is Paseo de la Reforma No.
350, Torre del Angel, Piso 15, Col
Juarez, C.P. 06600, Mexico City,
Mexico.
Immediately prior to the transaction, SC Americas directly
beneficially owned 158,941.02 proportionate voting shares,
representing approximately 67.5% of the voting and equity shares of
Sucro (and approximately 95.1% of the proportionate voting
shares). Upon completion of the transaction, SC Americas
directly beneficially owns 121,441.02 proportionate voting shares,
representing approximately 51.6% of the voting and equity shares of
Sucro (and approximately 93.6% of the proportionate voting shares).
SC Americas has advised the Company that its remaining shares are
held for investment purposes and it may increase or decrease its
holdings in Sucro in the future, including pursuant to a formal
takeover bid made by BSM in accordance with the Lock-up and Support
Agreement, subject to contractual restrictions (including those set
out in the Lock-up and Support Agreement), market conditions and
other relevant factors. The address of SC Americas is 2990 Ponce de
Leon Blvd. #401, Coral Gables,
Florida 33134.
The early warning disclosures above are issued pursuant to
National Instrument 62-103 – The Early Warning Systems and
Related Take-Over Bids and Insider Reporting Issues, which also
requires a report to be filed with regulatory authorities in each
of the jurisdictions in which the Company is a reporting issuer
containing information with respect to the foregoing matters
("Early Warning Reports"). BSM and SC Americas have
confirmed that the Early Warning Reports containing additional
information with respect to the foregoing matters will be filed and
made available under the SEDAR+ profile of Sucro at
www.sedarplus.ca.
About Sucro
Sucro is a growth-oriented sugar company that operates
throughout the Americas, with a primary focus on serving the North
American sugar market. The Company operates a highly integrated and
interconnected sugar supply business, utilizing the entire sugar
supply chain to service its customers. Sucro's integrated supply
chain includes sourcing raw and refined sugar from countries
throughout Latin America, and
refined sugar from its own refineries, and delivering to customers
in North America and the
Caribbean. Since its inception in
2014, Sucro has achieved growth by creating value for customers
through continuous process innovation and supply chain
re-engineering. Sucro has established a broad production, sales and
sourcing network throughout North
America with two cane sugar refineries and an additional
value-added processing facility, and two sugar cane refineries
under development in Hamilton,
Ontario and University Park,
Illinois (a suburb of Chicago). The Company has offices in
Miami, Mexico City, Cali, Sao
Paulo, and Port of Spain.
For more information, visit sucro.us and follow us on
LinkedIn.
About BSM
Beta San Miguel (BSM), is a
Mexican leading fully integrated sugar group, operating 11 mills
with an annual production of over 1 million tons of sugar. Founded
in 1988, BSM has steadily grown, offering a range of high-quality
sugar products and flexible services, including year-round
availability and swift delivery. Strategically located near major
Mexican ports, the company efficiently manages both national and
international distribution. BSM is also known for its high sense of
social responsibility, actively contributing to the communities in
which it operates. For more information, visit bsm.com.mx.
Forward-Looking Statements
This news release contains forward-looking information within
the meaning of applicable securities laws, including statements
with respect to key provisions of the Sugar Supply Agreement,
Investor Rights Agreement and Lock-up and Support Agreement, which
reflect the Company's current expectations regarding future events.
Forward-looking information is based on a number of assumptions and
is subject to a number of risks and uncertainties, many of which
are beyond the Company's control. Such risks and uncertainties
include, but are not limited to, the factors discussed under "Risk
Factors" in the Company's annual information form dated
April 18, 2024, which is available
under Sucro's SEDAR+ profile at www.sedarplus.ca. Actual results
could differ materially from those projected herein. The Company
does not undertake any obligation to update such forward-looking
information, whether as a result of new information, future events
or otherwise, except as expressly required under applicable
securities laws.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Sucro Limited