04 March 2005
	TOP DEALS - ILLOVO Agriculture sector steps up to the plate By Itumeleng Mahabane

Illovo sold a sugar mill and the surrounding estate to black investors for R335m last year. The sale of the Gledhow mill and estates to Grand Bridge Trading 40 took effect on June 1 2004. Major consortium shareholders include the Sokhela Family Trust, Gledhow employees and community-based groups. The deal includes a five-year management contract with Grand Bridge Trading 40. The transaction: A BEE group acquires 100% of an operational entity in a fully funded transaction. The financial position of the Gledhow business is not clearly set out (to determine the financial viability and the pricing of the transaction), but in view of the Land Bank providing 100% of the financing, we must assume that the Gledhow business is in a sound financial position. Gledhow is an important player in the sugar industry and the Gledhow mill crushes about 1,4 Mt of cane and produces about 150 000 t of sugar a year. This constitutes about 6% of SA's annual sugar production. This transaction represents the first significant transaction in the agricultural sector. In the absence of a finalised agricultural sector charter (this is still in draft form), Illovo was proactive in initiating the transaction. The key participant in Grand Bridge Trading 40, Patrick Sokhela, is a former employee of Illovo and has extensive experience in the sugar industry. This transaction will be reliant on the cash flows generated by the underlying business. The transaction is highly leveraged and thus has a high level of financial risk attached to it. However, its highly leveraged nature creates scope for value creation if successful.