Tanzania Sugar Board (TSB) has said the move by Kagera Sugar to acquire Tongaat Hullet’s Sugar assets is a significant milestone as it seeks to expand its wings beyond boarders.
TSB Director General Prof Kenneth Bengesi made the comment on Monday when reacting to the news over the local sugar producer’s decision to acquire Tongaat Hulett sugar assets.
Speaking to ‘Daily News’ Prof Bengesi said the board was delighted by the Bukoba based sugar producing company to acquire the assets of the South Africa-based sugar firm.
“We are proud that, Kagera Sugar, one of our local sugar producers, has extended its wings beyond the country’s borders to grab new opportunities,” he said.
He added, “Tongaat Hulett sugar is one of the largest sugar producers in the southern Africa, and thus for Kagera Sugar to acquire its assets is a commendable move.”
Tongaat Hulett sugar focuses on cane growing, sugar milling and refining throughout the Southern African region.
The company has four mills in South Africa with an installed capacity to produce more than 1.0 million tonnes of sugar per annum.
Kagera Sugar has emerged as the preferred equity partner to acquire Tongaat Hullet’s sugar assets, chosen out of a short list of eight candidates.
Kagera Sugar Managing Director Nassor Seif was quoted at the weekend as saying that the acquisition is in line with its overall group strategy across the Africa, where it has ambitions to become 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 group is committed to investing significantly in the operations to modernise the plants and expand them to increase production and efficiencies,” said Mr Seif.
Tongaat Hulett has secured Kagera Sugar as a strategic equity partner in a deal that will see the Tanzanian sugar giant acquire the sugar assets of the troubled sugar producer and property group.
The currently suspended JSE-listed group, which went into business rescue in October last year, confirmed last Friday that the proposed transaction will comprise the acquisition of its complete sugar division in South Africa as well as its sugar businesses in Zimbabwe, Mozambique, and Botswana.
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).
As part of the business rescue, Tongaat’s business rescue practitioners (BRPs) sought strategic partners to save the company, with Kagera, a sugar manufacturing company from Tanzania, emerging as the preferred partner out of a shortlist of eight candidates.
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.
Kagera Sugar also operates in the Democratic Republic of Congo (DRC) and the Middle East where it owns sugar assets and refineries.
Commenting on the Kagera deal, the BRPs said the group was both financially sound and have a solid track record.
“Its exposure to complementary sugar assets in Tanzania and the DRC offers relevant technical and operational knowledge to assist the turnaround of Tongaat Hulett’s South African sugar assets,” they said.
The BRPs added that Kagera’s sugar refineries in Oman and Bahrain would provide access to world-class technologies and expertise to improve efficiencies.
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 to retain jobs in KwaZulu-Natal and to protect the livelihoods of several stakeholders across Tongaat’s value chain, including that of the group’s many small-scale growers,” the company said.