NAMIBIA – South African based diversified agribusiness firm, Tongaat Hulett has indicated plans of channelling off its share interest in its Namibian business to Bokomo Namibia, a breakfast cereals company and division of Pioneer Foods Ltd for R220m (US$14.8m) in bid to reduce the group’s debt.
Tongaat Hulett owns an effective 51% beneficial interest in Tongaat Hulett Namibia (THN) with the net asset valued at R37m (US$2.4m) as at March 2019.
In a statement released to the JSE Stock Exchange, TH indicated that, “Notwithstanding that THN is a strong and well-established business in Namibia, the board has considered it as non-core and is of the view that its disposal would allow the Namibian business to grow into new areas while facilitating Tongaat Hulett’s access to the market via long term sugar and related products supply agreements concluded with Bokomo.”
Tongaat Hulett expects R112.2m (US$7.5m) before deductions for taxes and transaction costs upon completion of the deal which is nearly four-and-a-half times its market capitalisation which was R1.785bn (US$120m) in June.
The statement added that the purchase price for THN would be payable in cash on closing, subject to a post-closing adjustment relating to any variation from the agreed normalised working capital level of R25m (US$1.6m).
The proposed deal is still subject to approval by the Namibian Competition Commission, the sale of the business and the completion of a due diligence investigation THN by Bokomo before 30 November 2019.
Tongaat Hulett added that the due diligence investigation is largely complete and the process for filing with the Namibian Competition Commission is underway.
Tongaat having operations in South Africa, Mozambique and Zimbabwe, is also considering selling assets, raising capital through a share sale, or a combination of the two in order to reduce the group’s debt.
Tongaat said debt restructuring talks with South African and Mozambican creditors are progressing well, and that it is looking to conclude agreements as soon as reasonably possible.
In June the company unveiled plans of closing down its sugar company in Mafambisse, central Mozambique. The company has already halted the production of cane to mill sugar in 2020 and is currently sourcing the raw material from the previous crop season.
Last month the Zimbabwe Stock Exchange (ZSE) suspended Tongaat Hullet Zimbabwe’s subsidiary, Hippo Valley Estates Limited, from trading its shares on the local bourse.
According to the stock exchange, this follows the sugar giant’s failure to release its full year financial results who missed the June 30 deadline and also missed the extended deadline of July 31.
In addition to that, the Johannesburg Stock Exchange listed sugar producer has also secured a voluntary suspension of the listing of its shares on the Johannesburg and London Stock Exchanges, to cut costs and streamline its shareholding structure.
The board requested that its listings be suspended amid a forensic probe, after the company announced that its financial results for the year to March 2018 would have to be restated.
