Sunday Times E-Edition

Tiger Brands syndicate pleads for more time

By NICK WILSON

The consortium scrambling for funds to buy Tiger Brands’ deciduous fruit business in the Western Cape is pleading for more time, without which more than 4,000 jobs will be lost and 300 farmers face ruin.

This week Agri SA raised the alarm over the possible closure of the Langeberg & Ashton Foods (L&AF) canning facility in Ashton which the Growers Consortium, consisting of 160 fruit farmers who supply the facility, wants to buy.

Agri SA said the consortium needs R200m-R300m.

Grant Smuts, the consortium’s vicechair, said they were confident of securing an equity backer if the JSE-listed food producer gave them until April next year.

“The absolute essence of it ... is please just give us more time because we are going to make something work,” Smuts said.

Tiger Brands, SA’s largest food producer, confirmed this week it was consulting L&AF staff about the possible closure, which Agri SA says would affect more than 4,000 seasonal and permanent jobs, and have a disastrous effect on the local and national economies.

Smuts said the consortium was speaking to a “number of role players, and we’ve had a lot of interest”, but it needs more time to put together a financial model, including financing and possibly an equity partner.

Smuts is confident this can be done by April next year when harvesting is due. In the meantime the Growers Consortium was willing to keep L&AF operating, including collaborating with Tiger Brands, which would handle the management of operations, he said.

“We can collaborate and work out ways to ensure that it doesn’t make a loss. If that factory closes it is never going to open again and it’s going to be a social catastrophe,” Smuts said.

The producers who provided the raw produce for canning were also willing to sacrifice and take lower prices to make sure L&AF worked, he added.

Tiger Brands, which produces food such as Jungle Oats, Koo canned foods and All Gold tomato sauce, said consultations with

staff at the canning factory followed “the end of an exhaustive process” to find a buyer, but interested parties “were unable to secure the required funding to meet the business’s working capital requirements”.

Tiger Brands said it had engaged with the consortium for more than two years in efforts to find commercially viable options to conclude a sale. This included an offer by Tiger Brands to provide a level of vendor funding if the consortium was able to raise necessary funding to continue to operate the L&AF as a going concern.

The consortium “has still not been able to show or present to Tiger Brands any commitment of funding in support of their nonbinding indicative offer so as to be able to operate the L&AF business as a going concern”, Tiger Brands said, adding it remained open to engaging with interested bidders, including the Growers Consortium, if sufficient funding was secured.

“However, given the urgent need to make operational decisions, the company requires a timely commitment.”

Christo van der Rheede, executive director at Agri SA, said more than 300 fruit farmers in the Klein Karoo, Ashton, Robertson, Bonnievale, Breerivier, Wolseley and Ceres areas depended on the L&AF factory to process their goods, with no other markets available for their produce.

The L&AF facility is one of only two fruitcanning factories in SA.

Van der Rheede said job losses could run into thousands more in the value chain, adding that affected farmers may have to destroy 2,500ha of orchards.

Tiger Brands announced in May 2020 that it planned to exit its deciduous fruit business to “focus on manufacturing, marketing and distributing everyday branded food and beverages”.

Explaining the 2020 decision, the company said this week that the L&AF division largely serviced export markets beyond Africa and that it operated “in an industry where trade barriers impact the competitiveness of local produce.

“Fluctuations in exchange rates and global crop yields add further volatility,” it added.

The L&AF division produces canned fruit and fruit purées mainly for Europe, China, Australia and Japan.

Tiger Brands said that over the past four and a half years, the L&AF division had reported mounting operating losses. In its most recent reporting period, the first half of financial year 2022, the operating loss was R54m.

It said L&AF employed 250 permanent workers with seasonal employment peaking “at about 4,300 individuals during the apricot processing season for a period of about three weeks”.

Tiger Brands expects to complete consultations with affected staff in 60 days.

It is also in talks with the Western Cape and national governments “to protect the South African deciduous fruit-canning industry and support the growers”.

Mireille Wenger, Western Cape provincial minister of finance & economic opportunities, said the provincial administration was deeply concerned about the possible closure of the L&AF factory, which provided jobs in the region and throughout the entire supply chain in the agri-processing sector.

Wenger said the Western Cape government had been and would continue to engage with all parties to find a solution. That would include meetings with the Western Cape government’s official trade, investment and tourism promotion agency, Wesgro, as well as meetings with premier Alan Winde, her department, and senior officials and private sector parties.

The department of trade, industry & competition said it had discussed alternatives with Tiger Brands in view of the high number of jobs that were at risk,

The closure of operations would be devastating for the town, the community, affected farmers, workers and businesses in the area, it added.

“Every effort should be made to avoid closure of the plant,” the department said.

The department said minister Ebrahim Patel had assembled an experienced team of officials who have identified potential operators over the past two weeks, including possible buyers.

It said it had called on Tiger Brands to halt the discussions on retrenchment to allow this process to be completed.

Food and Allied Workers Union spokesperson Dominique Martin said the union planned to do “everything in its power to preserve jobs for its members”.

Any retrenchments would “hit the community hard, especially in the challenging economic times we find ourselves in”, Martin added.

Business Times

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2022-06-26T07:00:00.0000000Z

2022-06-26T07:00:00.0000000Z

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