Tongaat Hulett, Southern Africa’s biggest sugar producer which is in business rescue, says shareholders would be required to vote on bringing a new “strategic equity partner” (SEP) into the group, Kagera Sugar.
The group’s business rescue practitioners had advised on March 31 already that negotiations were underway to introduce a strategic equity partner. Although the percentage shareholding of the potential partner was not disclosed, a strategic equity shareholder would usually take anything up to a 50% stake of the equity.
Tongaat said the transaction would comprise the acquisition of the complete sugar division of Tongaat Hulett in South Africa and the investments in Zimbabwe, Mozambique and Botswana.
Kagera Sugar is a sugar manufacturing company situated in Kagera in the North-Western part of Tanzania. It is part of a group of companies that are the largest producers of sugar in Tanzania and owns sugar assets in Tanzania, the Democratic Republic of Congo and sugar refineries in the Middle East.
Tongaat’s business rescue practitioners said additional information on the process and the preferred SEP would be reported to creditors in monthly reports and included in the updated business rescue plan.
According to The Citizen online newspaper in Tanzania, in a report in January this year, the country has four sugar factories, Kagera Sugar, Kilombero Sugar, Mtibwa Sugar Estates and TPC Limited that produce an estimated 370 000 tons of sugar annually against domestic demand of about 670 000 tons, and the country was working to become self sufficient in the near future by producing 700 000 tons of sugar by 2025.
In comparison, South produces around 2 million tons of sugar per year, much of which is exported into the South African Customs Union market.
BUSINESS REPORT