Sucro Announces Purchase Of 15.9 Percent Interest By Mexico’s Beta San Miguel From Controlling Shareholder, Sugar Supply Agreement

Published online: Dec 30, 2024 News
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Coral Gables, Fla. – Sucro Limited, an integrated sugar refiner focused primarily on serving North American sugar markets, announced that Beta San Miguel, S.A. de C.V., one of the largest sugar refiners in Mexico by volume and sales, has acquired subordinate voting shares from the company’s controlling shareholder, SC Americas Corp., representing 15.93 percent of the voting and equity shares of the company.

SC Americas, which prior to the transaction owned approximately 67.5 percent of the voting and equity shares of the company, is controlled by Jonathan Taylor, the founder, Chief Executive Officer and a director of the company. In ancillary transactions, BSM has granted the company certain first offer, first refusal and matching rights for the purchase of raw and refined sugar exported by BSM from Mexico.

Additionally, Sucro has appointed a nominee of BSM to its board of directors and granted BSM certain board nomination and pre-emptive rights under an investor rights agreement.

Jonathan Taylor and SC Americas have also entered into a “hard” lock-up and support agreement with BSM under which they have agreed, subject to certain conditions, to tender a certain number of Sucro shares to BSM if BSM makes a formal takeover bid for all subordinate voting shares of the company within certain defined periods in 2027 or 2028, or to vote in favor of an equivalent alternative transaction.

Taylor commented, “This strategic relationship with BSM brings together two innovative companies with a shared vision for growth and North American expansion. The transaction not only underscores BSM’s confidence in our business but also strengthens our ability to serve the North American sugar market.”

Taylor added, “While this transaction marks a critical time in Sucro’s growth and development, it also provides important potential upside value if Sucro continues to execute on its current operating plan. Following completion of this transaction, Sucro management continues to own in excess of 60 percent of the voting and equity shares of the company, and we are extremely motivated and focused on delivering value for all shareholders.”

Patrik Palafox, Chairman of the Board of BSM, added, “This partnership with Sucro presents a solid strategic rationale for BSM. We recognize the potential to create value for both companies, by leveraging solid complementary strengths and expertise that exist between us. We are enthusiastic about the opportunity presented by Sucro’s business plan, which targets high-growth segments such as the Canadian market and the U.S. Northeastern region. This alliance enhances BSM’s position as a more prominent player in the international market, further strengthening our geographic diversification.”

Share Purchase

Under a securities purchase agreement, BSM acquired 3,750,000 subordinate voting shares from SC Americas on November 5, 2024, representing 15.93 percent of the voting and equity shares of Sucro, at a price of C$9.00 per share. To effect the sale, SC Americas converted 37,500 proportionate voting shares into 3,750,000 subordinate voting shares in accordance with the terms of the proportionate voting shares. Following the sale, SC Americas continues to own 121,441.02 proportionate voting shares, representing approximately 51.6 percent of the voting and equity shares of Sucro.

Sugar Supply Agreement

Under a sugar supply agreement, BSM has granted to Sucro certain first offer, first refusal and matching rights on all of BSM’s raw sugar export quota and up to 75 percent of BSM’s refined sugar export quota to the United States assigned by the Mexican Secretary of the Economy (subject to compliance with the current suspension agreement entered into by Mexican sugar producers/exporters with the U.S. Department of Commerce).  BSM has also granted to Sucro first offer, first refusal and matching rights on all raw and refined sugar BSM may export outside of the United States and Mexico (after serving the Mexican domestic market).

Lock-Up And Support Agreement

Under a lock-up and support agreement, Jonathan Taylor and SC Americas have agreed to tender sufficient shares to BSM to allow it to complete, at BSM’s discretion, a formal takeover bid pursuant to which it would acquire, when added to its existing shares, at least 51 percent of the outstanding voting and equity shares of the company on a partially-diluted basis provided that: (i) the formal takeover bid is for all outstanding subordinate voting shares (including those issuable upon the exercise or conversion of convertible securities) and is commenced by BSM during specified periods in either 2027 or 2028 that is not earlier than May 1 in each year; and (ii) the price per subordinate voting share under such takeover bid is not less than the Canadian dollar equivalent of nine-times diluted comprehensive income from continuing operations per share, as reported in Sucro’s audited financial statements for the year ending December 31, 2026, if the takeover bid is commenced within the specified period in 2027, or the Canadian dollar equivalent of eight-times diluted comprehensive income from continuing operations per share, as reported in Sucro’s audited financial statements for the year ending December 31, 2027, if the takeover bid is commenced within the specified period in 2028, in either case subject to a minimum bid price calculated as the Canadian dollar equivalent of eight- times average diluted comprehensive income from continuing operations per share, as reported in Sucro’s audited financial statements (subject to permitted adjustments) for the three most recently completed financial years, divided by two.

Jonathan Taylor and SC Americas have also agreed to vote in favor of an equivalent alternative transaction and any ancillary matters and to vote against any acquisition proposal or other action or proposal made in opposition to or competition with or which interferes with or prevents the consummation of the potential BSM takeover bid or alternative transaction. The Lock-up and Support Agreement does not contain any right to withdraw in the event that a superior offer is made for the shares of the Company.

The making of any takeover bid or alternative transaction is in the sole discretion of BSM and there can be no assurance that any takeover bid will be made or an alternative transaction will occur. 

Investor Rights Agreement

Sucro has also entered into an investor rights agreement with BSM under which BSM is entitled to nominate for election to the board of directors of Sucro a percentage of directors that is not less than the percentage of the voting and equity interest owned by BSM and its affiliates in the capital of Sucro, and BSM has also been granted pre-emptive and top-up rights to maintain, but not increase, its voting and equity interest in the company.

The Investor Rights Agreement also contains customary standstill restrictions on BSM and a covenant of BSM that any shares it may acquire under a formal takeover bid pursuant to, and from parties subject to, the Lock-up and Support Agreement will be excluded for purposes of determining whether “minority approval” of a second-step transaction (that would be completed not more than 120 days after the expiry of the takeover bid) has been obtained under Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions.

Appointment Of BSM Nominee To Board

In connection with the transaction with BSM, Sucro has appointed Patrik Palafox, BSM’s nominee, to the company’s board of directors as an additional sixth director. Palafox has been the Chief Strategy Officer of BSM since 2018 and the Chairman of the Board of Directors of BSM since 2024. He has 28 years of experience in finance, strategic planning and mergers and acquisitions, having led transactions valued at over US$1.5 billion. He holds an MBA from the IESE Business School.

For more information, visit sucro.us andbsm.com.mx.