France's Tereos seeks to exit ventures in China, Romania
French sugar producer Tereos is seeking to exit its ventures in China and Romania as part of a wider move by the new management to divest some international assets to lighten the group’s heavy debt and boost profitability.
It is reported by Reuters.
Tereos, the world’s second largest sugar producer by volume, reshuffled its top management since an extraordinary meeting in December dismissed its chief executive.
The new team, which had expressed strong concern about losses at some of Tereos’ international activities before taking over, said it was considering selling non-profitable or non-core assets but that it first wanted to do an audit of the group.
Tereos is in advanced talks with Singapore’s Wilmar International to sell its 49% stake in their starch joint venture in China.
The cooperative group is also seeking to exit its loss-making Romanian sugar activities.
The joint venture with Wilmar, launched in 2012, operates two large starch plants in China.
Talks with the agri-food giant, had started even before Tereos’ new management took over but had failed due to the low price offered by Wilmar before resuming this year.
The final price of the deal remained unclear the sale would still be made at a significant loss for Tereos.
Wilmar is “in serious talks” to buy a stake in Tereos’ starch business in China.
Tereos, which is made up of 12,000 cooperative members, purchased Romanian sugar maker Ludus in 2012, as part of a wide international expansion. But the unit has posted losses every year since 2014, according to company records.
The new management wants to stop the losses and has hired an international advisor to help it find a solution, with a sale seen as the first option.
The advisor has made initial approaches to potential buyers.
But a sale of the Romanian business could prove difficult because of its poor results but also because the region is not very attractive in terms of sugar beet yields.
If no buyer was found for the Romanian business, Tereos could halt it altogether.
Tereos reported a debt of 2.7 billion euros ($3.30 billion) at the end of last year, for annual sales of around 4.5 billion euros.
The group’s new management is due to unveil its new strategy on Wednesday when the cooperative group releases its yearly results.