Wiseman Khuzwayo and Bloomberg
Tongaat Hulett refused to comment yesterday on a report that its sugar operation in Zimbabwe, Triangle, had been given 14 days to comply with that country’s indigenisation laws or risk being kicked out.
Spokeswoman Michelle Jean-Louis said: “Tongaat Hulett will not be commenting further on the current matter in Zimbabwe at this stage as these are private issues and are best dealt with in that manner.”
Sean Gammon, the managing director of Imara Capital in Zimbabwe, said he believed that the local indigenisation laws did not cater for such a decree. Moreover, he believed that the authorities would be able to reach a settlement with Triangle. He said there had not been a case where a company was forced to shut down or leave the country for failing to comply with the indigenisation laws.
Tongaat Hulett fell the most yesterday in almost seven weeks. Shares lost as much as 4 percent, the most since September 11, to R135.22. At the close of trade the shares had slipped further, falling 4.55 percent to R134.38. This made it the worst performer in the 10-member FTSE/JSE Africa food producers index.
Zimbabwe introduced legislation in 2010 that compels all foreign and white-owned businesses with assets worth more than $500 000 (R4 million) to sell or cede 51 percent of their shares to black people.
Tongaat’s Zimbabwe operations produced 372 000 tons of sugar in the year to March, the company said on May 28, contributing 19 percent of group revenue and 32 percent of profit from operations. The operations comprise the wholly owned Triangle Sugar operation and its 50.3 percent holding in Hippo Valley Estates.
“We would like to advise that the ministry’s patience is fast running thin,” Zwelibanzi Lunga, the general manager for compliance at the Ministry of Indigenisation, said in a letter to Hippo Valley unit dated October 23.
“Should we not receive a proper compliant plan within the prescribed period, ministry and government would take it that shareholders of Triangle are not interested in continuing to do business in the country.”
The stock’s 30-day historical volatility, a measure of stock swings, increased to 21.18 points from 18.95 the previous trading day.
The FTSE/JSE Africa all share index’s 30-day volatility measure was at 11.21 versus 11.27. A higher reading means the price of an asset can move dramatically in a short period.