Rescue plan seeks private investors
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.