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Tate & Lyle to finalise plan for Splenda this month

(Adds background, details on debt, new sugar)

By Martinne Geller

LONDON, April 2 (Reuters) - Tate & Lyle Plc (LSE: TATE.L - news) is nearing a decision on how best to maximise returns from its struggling Splenda sucralose business and will communicate the result in coming weeks, the company said on Thursday.

Tate's sucralose problems surfaced in February 2014, when the company discussed a dramatic drop in prices of the artificial sweetener it sells to food and drink makers, due to intense competition from cheaper Chinese rivals.

The British food ingredients group, which also sells corn syrup and industrial starches, did not elaborate on the options for maximising value for Splenda, but in December, Reuters reported that U.S. healthcare company Johnson & Johnson (NYSE: JNJ - news) , the brand's owner, was exploring its sale.

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Tate & Lyle, whose shares were up 1.5 percent at 617 pence by 0715 GMT, said it expected the board to finalise a path this month and for it to be communicated in coming weeks.

The company also stood by its lowered full-year outlook, reflecting a performance that has been hurt by lower selling prices for its sucralose and production disruptions caused by last year's harsh winter in the United States.

It said group adjusted profit before tax for the year ended March 31 would be "modestly below" the 230 million to 245 million pound range it had forecast in September, a message it had given in February.

That was its third profit warning in a year.

Tate also said a new low-calorie sugar it launched in February was being met with "encouraging early interest and engagement" from customers, but noted that the product, called Dolcia Prima Allulose, would not have any material effect on group performance in the next financial year.

It also said it expected to report net debt as of March 31 of around 500 million pounds, up from 466 million in December, due to investments related to rebuilding inventories and the strengthening of the dollar. (Editing by David Holmes)