Rescue plan seeks private investors

The private sector has been invited to invest in, and rescue, the Eastern Cape’s amalgamated Majola and Magwa tea estates.

The Eastern Cape rural development and agrarian reform department (DRDAR) yesterday issued a call for expressions of interest in buying 51%, a controlling share, of the estates.

The department’s MEC, Mlibo Qoboshiyane, said the Majola tea estate was incorporated into the Magwa tea estate after a court process in which “workers resolved to join the two tea estates to form a single incorporated tea estate”.

The incorporated estate employs 2500 people and takes up 10000 hectares of prime agricultural land near Lusikisiki, said the MEC.

“With the 100% of Magwa tea estate ownership having been transferred from the Eastern Cape Development Corporation to the department, the government has developed a new shareholding structure to attract private sector investors,” Qoboshiyane said.

The new shareholding structure is slated to give the private investor a controlling majority share of 51%.

The remaining shares will be divided up with 26% going to the surrounding community, 13% to employees and 10% to the government.

“The private equity partner will be required to fund the 51% equity share by contributing 51% of the funding required in the approved business plan.

“A lease agreement with the community in lieu of the 26% shareholding may also be considered in proposals,” Qoboshiyane said.

All the stakeholders were being consulted about the business rescue and the long-term financial stability and operations of the tea estates, Qoboshiyane said.

“Provincial treasury has committed to allocate R116-million for the tea estate rescue process to improve tea production on the incorporated tea estate and this will add to the R20-million our department, DRDAR, has already transferred to the business rescue practitioner for interim operational requirements.

“Interested investors will be expected to submit a detailed approach and methodology explaining how the tea estate could be turned into a profitable and sustainable operation.

“Government will provide support to the investors and this will ensure that production goes unhindered,” said Qoboshiyane.

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