Tongaat to sell starch business to Barloworld
The sugar producer wants to cut debt by R8.1bn by March 2021
Agri-processing group Tongaat Hulett said on Friday it would sell its starch business to Barloworld for R5.35bn in a move to reduce its R13bn debt.
Tongaat is selling assets in a bid to cut R8.1bn in debt by March 2021. The former blue-chip firm also intends to ask shareholders for about R4bn in a rights offer.
The group said in a statement that jobs at the starch business would be retained, with the transfer of employees’ conditions of service intact.
“This was a compelling offer for our Starch business, which the board reviewed in detail. Our number one priority is to ensure the long-term sustainability of Tongaat, and a key element of this is paying down our debt as quickly as possible. Our agreement is to reduce debt by R8.1bn by March 2021 and we have already met and exceeded the first debt repayment milestone agreed with our lenders,” Tongaat CEO Gavin Hudson said.
“We have said for some time that we would consider a number of opportunities to reduce our debt and stabilise the business, including the sale of both core and noncore assets. Other debt-reducing activities include accelerating operational efficiencies, and a potential strategic equity capital raising initiative”.