THE High Court has granted listed sugar producer StarAfrica Corporation Limited leave to convene meeting with debtors and creditors as it looks to finalise a deal which will see the new investment in the company as well as the disposal of some divisions.
StarAfrica Corporation is believed to be in talks with South African sugar producer, Tongaat Hullet, for a possible loan facility to complete the deal.
The move is meant to arrest a haemorrhage that triggered management and board changes at the diversified conglomerate which, on Tuesday, issued a cautionary statement informing investors that it was in talks for a possible transaction that could impact on its share price.
“The directors of StarAfrica Corporation Limited wish to advise all stakeholders that in an order dated May 8 2013, the High Court granted the company leave to convene meetings with classes of all lenders and creditors under the chairmanship of Justice Lesile George Smith (Retired) to consider and if deemed fit, agree to with or without modification, a scheme of arrangement proposed by the company,” the company said.
As part of the scheme of arrangement, the cautionary statement added, the company was proposing to dispose of investments in an associate company and division.
“Discussions are under underway with potential buyers and subject to a successful conclusion of same shareholders will be approached to approve the disposal transaction,” said StarAfrica Corporation in the cautionary statement.
There is speculation that a deal involving Tongaat Hullett announced at the firm’s Annual General Meeting (AGM) in September last year was now being negotiated.
At the AGM, Finance director, Regis Mutyiri said raw sugar supplies had continued to affect operations at the company’s Harare plant and that plans were underway to negotiate a loan facility with Tongaat.
The transaction involved the extension of a US$6,8 million revolving sugar facility to enable the company to restart operations at the plant.
In September, StarAfrica had said the last revolving facility with Tongaat had been suspended because it had been unable to settle the debt.
“The refinery is closed because of lack of raw sugar. The challenge with raw sugar is that we suffered some losses. Because of the losses our facility with the raw sugar supplier is utilised. With the work that we have done we are confident that if we get raw sugar supply we will be able to run viably,” said Mutyiri.Advertisement
StarAfrica, the country’s only sugar refinery, requires between 1,500 tonnes and 2,000 tonnes of raw sugar per week to feed the market. Most of it comes from Tongaat’s Triangle and Hippo Valley operations.