Imperial Sugar Co.’s board of directors has unanimously rejected an unsolicited buyout offer from a shareholder that has been trying to purchase the Sugar Land company for months.
Schultze Asset Management, LLC offered in a Sept. 8 letter to pay $10.50 per share in cash for enough shares of Imperial Sugar stock to give it 79.9% of the company’s stock. Schultze currently owns about 1.5 million of Imperial’s 10.6 million outstanding shares, or 14.4%.
“The Board, after meeting with its financial and legal advisors, unanimously determined that the $10.50 per share price was grossly inadequate.” Imperial Sugar said Tuesday in a prepared statement. “In addition, the Board also determined that Schultze’s proposal was unacceptable because it sought to acquire control without providing full value to all shareholders.”
Ironically, Schultze’s recent offer is significantly lower than what it offered in May, according to filings with the Security & Exchange Commission.
“We now believe that our prior proposal in our letter dated May 19, 2005 to acquire the Company in a merger for $17.00 per share in cash for all of the outstanding capital stock of the Company not currently owned by us, significantly overvalued the Company and is not an appropriate purchase price,” Schultze Asset Management Managing Member George Schultze said in the Sept. 8 letter to Imperial CEO Robert Peiser and the board. “Despite the disappointing performance and results publicly announced by the Company since we submitted our prior proposal and its impact on the Company’s
valuation, we remain very interested in pursuing a possible acquisition…”
Imperial reported a net loss of $4.5 million, or 43 cents per share, for the quarter ending June 30, compared to net income of $4.3 million, or 42 cents per share, for the same quarter in 2004. Imperial blamed the loss on lower sales prices of its product combined with higher energy and transportation costs.
Imperial decided to close its landmark Sugar Land refinery in December 2002, and then waged a successful court battle against its workers’ union, which accused it of failing to pay severance benefits agreed to under collective bargaining. A final ruling against the union came in March.
A land developer, Cherokee Investment Partners, LLC, has agreed to purchase the refinery property from Imperial, and is in negotiations with the city of Sugar Land over how the project might proceed.
