Mmegi

SA sugar giant reduces stake in ‘Blue Crystal’

Sweet success: Blue Crystal has become a household brand over the name and was recently voted amongst the most recognisable local products PIC.BLUE CRYSTAL
Sweet success: Blue Crystal has become a household brand over the name and was recently voted amongst the most recognisable local products PIC.BLUE CRYSTAL

Troubled South African sugar giant, Tongaat Hulett, has pared down its investment in local household brand Blue Crystal, selling its direct 33.3% stake, as part of a business rescue process.

In a notice to the Johannesburg Stock Exchange this week, Tongaat Hulett directors said a sale agreement with the incoming investor Vision Parties had been concluded for the shares in Tongaat Hulett Botswana on January 18. Tongaat Hulett Botswana is the company behind the Blue Crystal Sukiri brand.

Together with a similar deal struck for the Zimbabwe operations in December, the latest transaction will result in Vision collectively acquiring a direct and indirect 50.1% of Tongaat Hulett Botswana.

“The sale agreements relating to the shares and claims held in the Mozambique entities are still in process and will be signed as soon as the parties are ready to do so,” directors said.

According to previous Bloomberg reports, Tongaat Hulett Ltd was placed in business rescue after “failing to recover from an accounting scandal that exposed a mountain of debt”. The scandal left the 133-year-old company owing billions of pula to various banks and lenders.

Business rescuers then approached several interested parties to finalise a deal that would see the debt settlement with an exchange of equity or other arrangement.

Vision Partners emerged as the successful rescue investor, with shareholders approving an “adopted plan” involving debt, equity and other technical arrangements. The share sales in Zimbabwe, Botswana and soon, Mozambique, are part of the arrangements.

“The successful execution of the Adopted Plan presents a reasonable prospect of achieving a positive outcome that aligns with the rights and interests of stakeholders and affected persons,” directors said.

Tongaat Hulett directors have stressed that the group’s Botswana, Mozambique, and Zimbabwe sugar operations are not financially distressed and would continue trading in the ordinary course.

“These three businesses are funded independently from the company and should be largely unaffected by the adverse circumstances affecting the company,” directors stated in a pinned notice on the website of the business rescue.

According to available records, Blue Crystal Sukiri was established in Francistown in 1985 as a sugar packing and distribution operation owned by the Botswana Development Corporation. Tongaat Hulett acquired majority shares and renamed the operations to Tongaat Hulett (Botswana) (Pty) Ltd in 2008.

Blue Crystal – as the company is still branded – sources its brown and white sugar from parent Tongaat Hulett’s operations in the SADC region.

Not much detailed information is available on the incoming shareholder Vision. Published reports suggest the investor is a consortium registered in Mauritius with possible links to South African, Pakistani, and Zimbabwean interests.

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