HARARE – In a bid to reduce its debt which stands at around R13bn by 60% by March 2021, Tongaat has embarked on an asset disposal scheme. Today the company said that it has agreed to dispose it’s agribusiness in Swaziland for R375m.
The sale of the asset by the sugar producer comes as it seems to reduce it’s debt by R8.1bn by March 2021.
The deal between Swaziland’s Public Service Pensions Fund and Tongaat Bullet is for the Tambankulu Estates which had 3 767ha under cultivation and it includes two agricultural estates on either side of the Black Umbuluzi River in Swaziland.
The sale comes as the company decided to sell assets after weak operational performance in recent years coincided with allegations of fraudulent accounting practices. As part of the plan to restructure the company under relatively new CEO Gavin Hudson, Tongaat will continue to seek and dispose assets it deems irrelevant at the moment in order to better it’s operations.
Earlier in the year Tongaat struck an agreement with Barloworld in February to sell its starch business for up to R5.3bn. This deal is in jeopardy after Barloworld triggered a material change clause which allows buyers to withdraw from deals if the value of the transaction has been undermined by a significant development. Tongaat disagrees that Covid-19 has been sufficient to trigger this clause, and the issue is being referred to a third party.
“We are confident about the future of Tongaat, and that the disposal of Tambankulu will help to further position the group for longer-term sustainability and value creation for Tongaat shareholders,” Hudson said in a statement today.
Tambankulu is the largest independent sugar cane estate in Eswatini, with an average annual yield per hectare of 125 tonnes, Tongaat said.
“Tambankulu’s farms are modern, using hi-tech irrigation systems, fertigation, artificial ripeners and herbicides,” the group said.
Tongaat Hulett had acquired Tambankulu in 1998, and the transaction is expected to be concluded on December 1 2020.