Business rescue practitioners have found a buyer for the entire sugar division of Tongaat Hulett Limited in South Africa and its investments in Zimbabwe, Mozambique and Botswana. Photo: Delwyn Verasamy
Business rescue practitioners have found a buyer for the entire sugar division of Tongaat Hulett Limited in South Africa and its investments in Zimbabwe, Mozambique and Botswana.
Out of eight preferred bidders for the strategic equity partnership, Kagera Sugar Limited, based in Tanzania, came out tops. The price of the acquisition has not yet been released.
Kagera, a sugar manufacturing company, is part of a group of companies which are the largest producers of the commodity in Tanzania. Apart from its sugar assets in Tanzania, it also has some in the Democratic Republic of Congo and the Middle East.
As part of the business rescue process — which Tongaat entered in late 2022 after it could not pay its debts — the practitioners sought an equity partner that would purchase constituent parts of the company or the entire operation.
“The group [Kagera] is financially sound, with a solid track record. Its exposure to complementary sugar assets in Tanzania and the Democratic Republic of the Congo offers relevant technical and operational knowledge to assist the turnaround of Tongaat Hullet’s South African sugar assets,” the business rescue practitioners said in a statement.
“In addition, the sugar refineries in Oman and Bahrain will provide access to world-class technologies and expertise to improve efficiencies.”
The practitioners opted to sell the complete sugar division of Tongaat Hulett and its investments in the region because continuing to operate Tongaat Sugar Assets as a combined multi-country group would ensure continuity for the operations in the countries outside of South Africa.
It would also provide the South African business with access to the technical capability to improve production, allow it to retain jobs in KwaZulu-Natal and protect the livelihoods of several stakeholders across Tongaat Hulett’s value chain, including that of the group’s many small-scale growers.
The Mail & Guardian has previously reported that small-scale growers in KwaZulu-Natal were the most affected by Tongaat Hulett’s woes when the company defaulted on its payments. There was no other option for processing their sugar cane because the closest mill, Gledhow, also entered into business rescue earlier this year, and the others were too far away.
Commenting on the transaction, Nassor Seif, managing director of Kagera Sugar, said the Tongaat Hulett acquisition is in line with the group’s overall strategy to expand its operations throughout Africa.
“The group is committed to investing significantly in the operations to modernise the plants and expand them to increase production and efficiencies,” Seif said.
The updated business plan is due to be voted on in September.