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ILLOVO SUGAR LIMITED - PRESS RELEASE: ILLOVO INTRODUCES LANDMARK BROAD-BASED EMPOWERMENT IN SUGAR MILLING AND GROWING OPERATION Illovo Sugar Limited (Incorporated in the Republic of South Africa) Company registration number 1906/000622/06 JSE Share Code: ILV ISIN: ZAE000003547 ("Illovo Sugar" or "the Group") ILLOVO INTRODUCES LANDMARK BROAD-BASED EMPOWERMENT IN SUGAR MILLING AND GROWING OPERATION * Gledhow sugar mill and cane growing estates sold for R335 million in cash to Grand Bridge Trading 40 (Pty Ltd ("Grand Bridge") * First sale of a sugar mill in South Africa to a BEE grouping * The major shareholders of Grand Bridge include the Sokhela Family Trust and Gledhow employees, in addition to historically disadvantaged community-based associations, businesses and individuals * Large part of the Gledhow estates will be on-sold to medium and / or small-scale farmers, enhancing the broad-based nature of the transaction * Current management and staff retained; Illovo to provide management support for five years * Financial effects on earnings not considered material - proceeds to strengthen balance sheet in preparation for future growth * Acquisition finance for Grand Bridge has been provided by the Land and Agricultural Bank of South Africa * Effective date of sale 1 June 2004; subject to the approval of the Competition Authority Don MacLeod, Illovo Managing Director, commented: "This is a ground breaking transaction. We are delighted to be introducing direct and broad-based black economic empowerment into the sugar milling industry in South Africa. We will work closely with Grand Bridge in promoting the long-term sustainability of the business." "The proceeds from the sale will be used to strengthen the balance sheet in preparation for future growth in new and existing areas within Africa." Dr Patrick Sokhela, Grand Bridge Chairman, commented: "We are proud to have reached agreement in this exciting transaction. It will allow for the participation of a wide range of local communities in the future business potential at Gledhow, as well as its employees and other regional groupings. We look forward to partnering Illovo through the next five years to ensure the highest standards of operational excellence are maintained." "We have been negotiating with Illovo in respect of putting a BEE deal on the table since 2000 and I commend Don MacLeod and his team for the patience and support we have received from everyone at Illovo." 17 May 2004 Enquiries: ILLOVO SUGAR 031 508 4300 Don MacLeod John Russell Chris Fitz-Gerald GRAND BRIDGE Patrick Sokhela 083 627-9068 COLLEGE HILL 011 447 3030 Nicholas Williams 083 607 0761 Angela Parr 083 578 3885 NOTES TO EDITORS Illovo Sugar Illovo Sugar is a leading, global, low-cost sugar producer and a significant manufacturer of high-value downstream products. The group has extensive agricultural and manufacturing operations in six African countries and also operates a beet sugar manufacturing plant in the United States. Excellent climatic and soil conditions found in the group"s African countries of operation, accompanied by irrigation from secure water sources, are ideal for the cultivation of high-yielding and excellent quality sugar cane. Annual cane production of approximately 5.8 million tons is produced on agricultural estates in South Africa, Malawi, Zambia, Swaziland, Tanzania and Mozambique. Group sugar production amounts to approximately 2.3 million tons. A recently completed independent survey of international sugar production costs revealed that Malawi, Zambia, South Africa and Swaziland were ranked among the world"s ten lowest-cost cane sugar producers. The production costs of the group"s US beet sugar factory are in line with other world beet sugar producers. Commitment to Black Economic Empowerment Illovo has adopted an integrated approach to BEE in South Africa, encompassing meaningful and sustainable participation of Black people at all levels of the operations of the company. Significant resources are invested in various aspects of human resource development and skills upliftment programmes. The company has specific targets for achieving employment equity targets. BEE initiatives to promote broad-based Black opportunity within the communities in which it operates have been ongoing and include Illovo"s medium-scale farm development programme that was launched in 1997 in order to giver further impetus to established sugar industry programmes to promote the participation of historically disadvantaged people and communities in the sugar cane business. Farms sold to Black medium-scale farmers as a percentage of cane land owned by the company amounted to 26.5% before this transaction. The agreement with Grand Bridge brings this total to 53%. In addition, about 1670 employees, of whom 84% are new home owners from designated groups, have been assisted to acquire company-owned houses or to purchase houses in the open market. Gledhow (See SENS announcement) Grand Bridge The chairman of Grand Bridge is Dr Patrick Sokhela who has been involved in South African sugar industry affairs for more than 20 years. Dr Sokhela"s primary interest has been in the development of small-scale growers, mainly in administration, organisational structures, training and support services. He was the immediate past CEO of the Institute of Natural Resources and a previous director of the SA Cane Growers" Association. Dr Sokhela remains a trustee of the Small-Scale Growers Development Trust, an organisation he helped to establish in the early 1990"s to assist in the development of small-scale growers. He holds several key positions in a range of professional and developmental organisations in KwaZulu-Natal and is currently chairman of the KwaZulu-Natal Agricultural Development Trust. Mr Sokhela is a previous employee of Illovo Sugar having held several agricultural positions before he joined the SA Cane Growers" Association in 1992. Date: 17/05/2004 10:01:04 AM Supplied by www.sharenet.co.za Produced by the JSE SENS Department
