Tongaat Declines After Zimbabwe Ultimatum: Johannesburg Mover
Tongaat Hulett Ltd. (TON) fell the most in more than four months after Zimbabwe’s government gave the South African sugar producer company 14 days to submit a plan to sell a majority stake in its local operations.
Shares declined 4.6 percent to 134.38 rand by the close in Johannesburg, the lowest price since Sept. 11 and making the stock the worst performer in the 10-member FTSE/JSE Africa Food Producers Index. (JFPPS)
Zimbabwe introduced legislation in 2010 that compels all foreign and white-owned businesses with assets worth more than $500,000 to sell or cede 51 percent of their shares to black citizens. Tongaat’s Zimbabwe operations produced 372,000 tons of sugar in the year through March 2012, the company said on May 28, contributing 19 percent of group revenue and 32 percent of profit from operations. The operations comprise the wholly owned Triangle Sugar operation and its 50.3 percent holding in Hippo Valley Estates Ltd. (HIPO)
“We would like to advise that the ministry’s patience is fast running thin,” Zwelibanzi Lunga, general manager for compliance at the Ministry of Indigenization, said in a letter to Hippo Valley unit dated Oct 23. “Should we not receive a proper compliant plan within the prescribed period, ministry and government would take it that shareholders of Triangle are not interested in continuing to do business in the country.”
Tongaat spokeswoman Adelaide Chikunguru said the company was “not prepared to comment on that issue” by phone from Chiredzi.
The stock’s 30-day historical volatility, a measure of stock swings, increased to 23.75 from 18.95 the previous trading day. The FTSE/JSE Africa All Share Index’s 30-day volatility measure was at 11.18 versus 11.27. A higher reading means the price of an asset can move dramatically in a short period.
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