The acquiring company will also buy Tongaat’s investments in Zimbabwe, Mozambique and Botswana
Tongaat Hulett has secured Kagera Sugar as a strategic equity partner in a deal that will see the Tanzanian sugar giant acquire the sugar assets of the troubled sugar producer and property group.
The currently suspended JSE-listed group, which went into business rescue in October 2022, confirmed on Friday that the proposed transaction will comprise the acquisition of its complete sugar division in South Africa as well as its sugar businesses in Zimbabwe, Mozambique, and Botswana.
Tongaat did not confirm the monetary value of the equity deal, nor did it say whether the group would stay on the JSE (based on the bourse lifting the suspension of trade in the company’s shares).
As part of the business rescue, Tongaat’s business rescue practitioners (BRPs) sought strategic partners to save the company, with Kagera, a sugar manufacturing company situated in the North-Western part of Tanzania, emerging as the preferred partner out of a shortlist of eight candidates.
The company, the third largest sugar producer in Tanzania is backed by European investors, Norfund, a Norwegian-based development finance institution that committed an investment in the company in the form of a loan in 2020.
Commenting on the Kagera deal, the BRPs said the group was both financially sound and have a solid track record.
"Its exposure to complementary sugar assets in Tanzania and the Democratic Republic of Congo offers relevant technical and operational knowledge to assist the turnaround of Tongaat Hulett’s South African sugar assets,”
they said.
Tongaat noted that continuing to run its sugar assets as a combined multi-country group would ensure continuity for the operations in Mozambique, Zimbabwe and Botswana.
“It will also provide the South African business with access to technical capability to improve and to retain jobs in KwaZulu-Natal and to protect the livelihoods of several stakeholders across Tongaat’s value chain, including that of the group’s many small-scale growers,” the company said.
For Kagera, the acquisition is in line with its overall group strategy across the Africa, where it has ambitions to become a leading sugar producer on the continent, said Nassor Seif, managing director of Kagera Sugar.
“We will extend the core values that have resulted in the success of our group companies to the new Southern African operations to benefit employees, growers and ultimately the economy of the region,”
he added.
Source: Moneyweb
