Potential mill investors in misconduct allegations
A MULTIMILLION-DOLLAR proposed transaction between the Isis Central Sugar Mill and Almoiz Group may be on shaky ground unless a “satisfactory response” to allegations of misconduct by Almoiz Industries Limited is provided to the local mill.
The allegations surfaced in a Inquiry Commission by the Government of Pakistan into the increase in sugar prices in Pakistan.
In a letter to ICSM shareholders on Saturday, board chairman Peter Russo wrote that with regards to Almoiz Industries, “the alleged misconduct relates to it pricing of sugar cane, production costs, dealings with sugar growers and buyer, and related financial and tax practices”.
Mr Russo also noted that the Pakistan Sugar Mills Association “has rejected the findings, conclusions and recommendation of the report”, with intentions to “share a more detailed response about the contents of the report in due course” in his letter on behalf of the board.
In November last year ICSM shareholders met and 84 per cent voted in favour of a proposal for Pakistan-based Almoiz Group to invest up to $35 million in ICSM.
Gaining regulatory approval from the Bank of Pakistan and orders from the Supreme Court of Queensland were part of the process.
An ICSM spokesperson said the board met last week to discuss the report and wrote to shareholders shortly thereafter.
“The Board determined that Almoiz Industries must provide ICSM with a satisfactory response to the allegations,” the ICSM spokesperson said.
“The conditions precedent must be satisfied by Friday 29 May for the proposed transaction to proceed.
“The deadline can only be extended with agreement from both parties.
“The Board will continue to inform shareholders of any updates.”
According to the ICSM letter, the Inquiry Commission investigated ten Pakistan sugar mills, representing 26 per cent of the total sugar production in Pakistan with the report containing allegations of misconduct against six companies that own these mills.
Last year the NewsMail reported that the proposed transaction will be implemented in two steps.
The first included $16 million to be paid directly to ICSM shareholders to acquire 35 per cent of existing shares at a fixed price of $10.45 per share.
A further $9 million will be used to purchase additional shares, with $6 million of that being paid directly to eligible growers over three years.
This first step was said to grant Almoiz Group a 45.66 per cent stake in ICSM.
“However, if the ICSM board votes in favour of this, they cannot back out of the second step, in which a further $10 million will be paid by Almoiz Group for new ICSM shares at $10.45,” the article read.
“This second step will grant Almoiz Group a 54.03 per cent share in the Isis Central Sugar Mill.”
A new constitution will also be signed by the ICSM board, increasing the Board membership to seven members.
The NewsMail attempted to contact to Almoiz Industries Limited for comment.
The Inquiry Commission’s report is available at https://issuu.com/etribune/docs/si