Tongaat Hulett, the South African sugar producer, is planning to sell its sugar estates, including those in Zimbabwe, to Kagera Sugar, one of East Africa’s biggest sugar producers. This is part of Tongaat Hulett’s effort to rescue the company after struggling since 2019 due to corporate scandals and debt.
Tongaat said in a notice on the Johannesburg Stock Exchange yesterday:
The proposed transaction will comprise the acquisition of the complete sugar division of Tongaat Hulett Limited in South Africa and the investments in Zimbabwe, Mozambique and Botswana.
Tongaat runs Hippo Valley and Triangle sugar estates in Zimbabwe, which provide most of the group’s sugar output. In January last year, Tongaat shareholders approved an offer by Zimbabwean businessman Hamish Rudland to rescue the company, but it fell through. Said the administrators:
We started the process with a list of more than 70 interested parties, which was narrowed down to eight that focused on acquiring the combined Tongaat Sugar Assets. After a rigorous process, we identified Kagera Sugar as the preferred candidate.
The administrators believe that Kagera’s access to sugar refineries in Oman and Bahrain will provide modern technologies and expertise to improve efficiencies at Tongaat operations. The sale is subject to the approval of Tongaat creditors in September and may be subject to regulatory approvals in Zimbabwe.
Kagera Sugar’s Managing Director, Nassor Seif, stated that the company is committed to investing significantly in modernizing and expanding the sugar estates acquired from Tongaat Hulett. Kagera Sugar is backed by Norfund, a Norwegian development finance fund that invested in the company in 2020.
The sale is subject to the approval of Tongaat Hulett’s creditors in September and may also require regulatory approvals in Zimbabwe. Tongaat’s Hippo Valley produces over half of Zimbabwe’s sugar requirements, and the company has been expanding output by increasing land under cane and partnering with private farmers. The company’s sugar milling license has been extended for 20 years, while tenure is being secured on its two main estates.
Source PindulaNews
