South Africa‘s heavily indebted sugar producer Tongaat Hulett has entered negotiations on the potential sale of Tongaat Hulett Starch, it said on Thursday, without providing details on the talks.
The agriculture and agri-processing company is seeking to cut debts through selling assets, cutting jobs, raising equity and other measures aimed at boosting cash flow.
Tongaat said in January it had already met its first debt reduction milestone of R500 million as defined in its refinancing agreements with funders and assets disposal assessments were at an advanced stage.
At 09:38, shares in Tongaat, which were voluntarily suspended from trade in June until earlier this month as it prepared to restate its financial results, were up 3.6% at R4.02.
Tongaat Hulett Starch is Africa‘s largest producer of starch, glucose and related products, according to Tongaat’s website. Its five mills make ingredients for alcoholic drinks, baking, jams, canned food and other products.
In the six-months ended September 30, the starch and glucose operations reported a flat operating profit of R306 million and grew sales volumes by 4.5% to 254 000 tons, benefiting from increased demand in the alcoholic beverages sector and continuing growth in the coffee creamer sector.