Tongaat Hulett to sell sugarfarm for R375m as it reduces debt
JOHANNESBURG - Troubled agriculture and agri processing company Tongaat Hulett said on Wednesday it would sell a sugarcane farm in eSwatini to Eswatini’s Public Service Pensions Fund for R375 million as it continues to reduce its huge debt following an accounting scandal.
The farm, Tambankulu Estates Proprietary Limited, had 3 767 hectares of fully irrigated land under sugarcane and was producing 62 000 tons of sucrose a year, Tongaat Hulett said.
Tambankulu was also the largest independent sugarcane estate in Eswatini, with an
average annual yield per hectare of 125 tons.
The consolidated net asset value (NAV) of Tambankulu as of March 31 was R171.7m and Tambankulu’s profit after tax for the year ended March 31 was R40.9m. The NAV excluded an intercompany loan from Tambankulu to THL of R231 800 000, the group said.
Tongaat Hulett said the move was in line with its strategy to reduce the group’s debt to more sustainable levels and of the undertakings it had given to its funders to reduce debt levels by R8.1 billion by March 2021.
To reduce debt the board had initiated various processes including, implementing greater operational efficiencies in order to improve the group’s cash flow, considering potential
non-core and core asset disposals and considering potential equity capital raising initiatives, the group said.
Tongaat Hulett said it believed that "although Tambankulu is a quality and well-run business, it is not fully integrated into the larger sugar business of the THL (Tongaat Hulett Limited) group and accordingly has agreed to dispose of this business. This disposal reinforces THL’s commitment to reduce debt levels and to reposition the THL group for long-term sustainability and value creation for THL shareholders."
Tongaat Hulett is trying to recover following a forensic probe by PricewaterhouseCoopers last year, which found that its assets and profits for the year to end March 2018 were overstated.