Tongaat Hulett’s business rescue practitioners (BRPs) have selected a preferred bidder for the troubled sugar producer. It is now up to shareholders to vote on the proposed sale. 

Kagera Sugar Limited, a Tanzanian sugar producer which is backed by Norfund – the Norwegian Investment Fund for Developing Countries – has assets in Tanzania and the Democratic Republic of Congo, as well as refineries in Oman and Bahrain. 

Little is known about the company, which does not have a website or a LinkedIn profile, but does have a football club named after it. Norfund says Kagera, based in Bukoba, northwestern Tanzania, is the third-largest sugar producer in the country and is involved in growing sugar cane, processing and distribution of sugar.

Billionaires Africa reports that Kagera is a subsidiary of the Super Group (not related to the South African mobility group), a Tanzanian group controlled by Ali Seif and his family. Super Group’s interests include automotive manufacturing, logistics, steel manufacturing and sugar production.

The proposed transaction will see Kagera acquire Tongaat Hulett Limited in South Africa and Tongaat’s sugar assets in Zimbabwe, Mozambique and Botswana.

On Friday, the BRPs said that when they started the business rescue process, more than 70 parties were interested in acquiring Tongaat. The list was narrowed down to eight. 

“After a rigorous process, we identified Kagera Sugar as the preferred candidate. The group is financially sound, with a solid track record. Its exposure to complementary sugar assets in Tanzania and the Democratic Republic of Congo offers relevant technical and operational knowledge to assist the turnaround of THL’s [Tongaat Hulett Limited’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.”

While shareholders are only expected to vote on the deal in September, it is good news for employment in KwaZulu-Natal as the livelihoods of stakeholders across THL’s value chain will now be less uncertain. 

Kagera’s managing director, Nassor Seif, told the media that the acquisition is in line with the group’s plans to expand operations throughout Africa. “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.”

Commenting on the development, SA Canegrowers welcomed Tongaat’s announcement of the equity partner.

CEO Thomas Funke said: “SA Canegrowers welcomes the announcement of a strategic equity partner in the THL business rescue process. This is an important step forward, but much remains to be determined. We will continue to monitor the situation closely as it develops. The most important outcome will be the survival of growers’ operations and the protection of the livelihoods they sustain.” 

Tongaat Hulett Sugar was placed in voluntary business rescue in October 2022 to avoid bankruptcy in the aftermath of massive fraud discovered in 2018. 

The crisis at Tongaat has had widespread repercussions for workers, millers, farmers and others in the broader supply chain. 

Earlier this month, RCL Foods, which manufactures Selati Sugar, Rainbow and Yum Yum peanut butter, issued a trading statement advising shareholders that profits were expected to be down at least 30% compared with last year, mainly driven by the special levy raised by the South African Sugar Association on the group’s sugar business unit, the significant impact of rolling blackouts across all operations in the current period, and unrecovered feed costs in its Rainbow division.

RCL Foods and other sugar stakeholders believe that the levy is a statutory obligation. 

In June, Tongaat Hulett’s creditors voted to postpone to the end of September the decision on approving the business rescue plan, allowing the BRPs to amend their rescue plans to take into account “various developments”, which include engagements with the potential strategic equity partners. DM