SOUTH AFRICA – Kagera Sugar Limited, one of the largest sugar millers in Tanzania, has been selected by Tongaat Hulett’s business rescue practitioners (BRPs) to acquire all the assets of the debt-ridden miller.

The proposed transaction will comprise the acquisition of the entire sugar division of Tongaat Hulett Limited (THL) in South Africa, as well as investments in Zimbabwe, Mozambique, and Botswana.

Kagera owns sugar assets in Tanzania, the Democratic Republic of Congo (DRC), and the Middle East. 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.

“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 as the preferred candidate. The group is financially sound, with a solid record,” the BRPs said.

“Its exposure to complementary sugar assets in Tanzania and the DRC offers relevant technical and operational knowledge to assist the turnaround of THL’s South African sugar assets. In addition, the sugar refineries in Oman and Bahrain will provide access to world-class technologies and expertise to improve efficiencies.”

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).

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 retain jobs in KwaZulu-Natal and to protect the livelihoods of several stakeholders across.

Kagera MD Nassor Seif stated: “The acquisition is in line with the group’s overall strategy to expand its operations throughout Africa and its vision of becoming a leading sugar producer on the continent. “

“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.”

The Kagera group is committed to investing significantly in the operations to modernize the plants and expand them to increase production and efficiency.

Chris Logan, CIO at Opportune Investments, and shareholder activist said while the takeover is potentially a positive development, given Karega is little known, their ability to focus on the business’s turnaround still largely hangs on how much financial resource and technical knowledge Karega can bring to the party.

He added that Tongaat needs quite a bit of money thrown at it as the problem has always been the SA sugar assets; the mills and the cane lands, and that is difficult to turn around because they are old mills.

The SA Canegrowers, who had been pressing their thumbs in hope for a suited bidder, welcomed the Tongaat’s announcement of the equity partner, describing it as “an important step forward”.

For all the latest food industry news from Africa and the World, subscribe to our NEWSLETTER, follow us on Twitter and LinkedIn, like us on Facebook and subscribe to our YouTube channel.