JSE-listed Tongaat Hulett will sell its Tambankulu Estates asset in eSwatini to that country's Public Service Pensions Fund (PSPF) for R375-million.
Tongaat Hulett CEO Gavin Hudson says the sale of Tambankulu is fully aligned with the company’s turnaround plan and will allow the group to further pay down its debt.
“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. Tambankulu is a quality, well-run business that is not core to our larger sugar business.
"This was a reasonable offer based on a thorough due diligence and independent valuation input that supported the price and after due consideration the board decided it would be in the best interests of the company and its shareholders to dispose of this asset,” he notes.
Hudson adds that PSPF is considered a strong strategic shareholder of the business.
Tambankulu is the largest independent sugarcane estate in eSwatini and covers two agricultural estates near the Black Umbuluzi river. The estate has more than 3 700 ha of land under sugarcane and is producing 62 000 t/y of sucrose.
Tambankulu’s farms are modern and use high-tech irrigation systems, fertigation, artificial ripeners and herbicides. The estate delivers its sugarcane to the nearby Simunye and Mhlume sugar mills.
“We are confident about the future of Tongaat and that the disposal of Tambankulu will help to further position the group for longer-term sustainability and value creation for Tongaat shareholders,” says Hudson.