23 July 2023
By: Lloyd Phillips
The announcement of a preferred bidder for Tongaat Hulett’s sugar assets and investments hopefully heralds a return to stability for South Africa’s sugarcane value chain.
Tanzanian sugar manufacturing company Kagera has been announced as the preferred bidder for Tongaat Hulett’s complete sugar division. The division comprises Tongaat Hulett Sugar in South Africa, and sugar assets and other investments in Zimbabwe, Mozambique and Botswana.
A statement by Tongaat’s business rescue practitioners says Kagera is part of a group of companies that are the largest sugar producers in Tanzania. They also own sugar assets in the Democratic Republic of Congo (DRC) and the Middle East.
More than 70 parties expressed interested in purchasing part or all of the beleaguered Tongaat business. They were narrowed down to eight preferred bidders who wanted to acquire Tongaat’s combined sugar assets and investments.
“After a rigorous process, we identified Kagera Sugar as the preferred candidate. The group is financially sound, with a solid track record,” say the business rescue practitioners.
“Its exposure to complementary sugar assets in Tanzania and the DRC offers relevant technical and operational knowledge to assist the turnaround of Tongaat’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.”
The statement points out that benefits of the intended acquisition will include the continued operations of Tongaat’s sugar assets and investments as a combined multi-country group across South Africa, Mozambique, Zimbabwe and Botswana.
Furthermore, the South African operations will gain access to technical capabilities to improve operations and retain jobs in KwaZulu-Natal where Tongaat operates. Finally, the livelihoods of many stakeholders, including numerous smaller-scale sugarcane growers, across Tongaat’s value chain will be protected.
In the statement, Kagera’s managing director, Nassor Seif, says: “The acquisition is in line with [our] group’s overall strategy to expand its operations throughout Africa, and with 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 of companies to the new Southern African operations to benefit employees, growers and, ultimately, the economy of the region. Our group is committed to investing significantly in the operations to modernise the plants and expand them to increase production and efficiencies.”
Online information about Kagera is scarce. What African Farming could find shows that Kagera appears to be privately owned by the Super Group of Companies in Tanzania. In turn, these companies appear to be owned by Seif and his brother.
Dreyer Senekal, whose Senekal Familie Boerdery in KwaZulu-Natal’s Mkuze area is believed to be the largest single supplier of sugarcane to Tongaat, welcomes the announcement of the preferred bidder.
He explains that a return to stability in South Africa’s sugarcane value chain is desperately needed. “I don’t know anything about the preferred bidder, but obviously the business rescue practitioners and the banks have already done, and will continue to do, thorough due diligence.
“It will be interesting to see what plans the bidder has for strategising and operating Tongaat’s sugar business. It will hopefully finally put this entire knife-edge situation to bed. Larger-scale and smaller-scale growers, and many other stakeholders, have had so many questions about what’s happening with Tongaat. These need to be answered,” Senekal says.
The business rescue practitioners say Tongaat’s creditors and other interested parties will receive monthly updates on Kagera’s proposed acquisition, and about the broader business rescue plan for Tongaat.
