Sugar Mill Turnaround and Sale

Cash flow management | Turnaround | Debt raise

Vantage Performance acted as the Chief Restructuring Officer (CRO) for this project.

How we helped a failing sugar mill weather the storm.

A devastating cyclone and prolonged heavy rains hit the Proserpine sugar cane milling business in North Queensland right before harvest wiping out the crops in the region. The resulting loss of revenue couldn’t have come at a worse time for the 100 year old company which was already facing significant cost overruns on a large capital intensive project.

The business was asset rich, but cash poor; and the board was under extreme pressure as the mill was the town’s biggest employer and its closure would have a devastating impact on the community.

The inclement weather and increasing consolidation within the sugar industry had severely affected the business’s revenue and cash flow, and its normal healthy annual turnover of $110 million was dangerously down on previous years.

The immediate problems the business faced were a $25M working capital shortfall and a huge tax debt. So they called in Vantage Performance.

How we turned things around.

Our immediate response was to provide the board with strategic options and implement a 100 day working capital management and business stabilisation plan which was successful in improving cash flow by $5M.

The next step was to restore the confidence of its financiers, members, suppliers, farmers, the local community and particularly the customers of its deposit scheme because if they withdrew their deposits the working capital requirement would have increased to $45M.

The process was complex. We stabilised the deposit scheme to encourage the support of financiers and developed a turnaround plan to support a $20M debt raise. A carefully prepared submission successfully secured a $20M increase in debt facilities which together with the $5M working capital management plan covered the working capital requirement.

Now it was time to decide the future of the business with a solution that would offer the best return to its many stakeholders. After careful consideration the board decided to sell the business and it was eventually sold to Wilmar International, one of the worlds largest sugar producers. A very rewarding outcome as we were also able to save several hundred jobs.

“Michael and the team ran the project well and on time. The outcome was increased financial support from our bank which allowed us to implement a business sale without cash flow pressures.”

John Power, General Manager

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Michael Fingland

My philosophy is that there is always a way to solve a crisis, as long as you’re engaged early enough.

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Andrew Birch

Cooperative leadership teams that develop prioritised actions to progress towards clear strategic objectives can achieve long-term business viability.