JOHANNESBURG, SOUTH AFRICA — Tiger Brands Ltd will sell its 65.7% stake in Tiger Branded Consumer Goods Plc (TBCG), formerly Dangote Flour Mills, to Dangote Industries Limited (DIL) for $1.
DIL will invest $46.1 million into TBCG “to stabilize the business and place it on a sustainable path” a statement from Tiger Brands said. Tiger Brands will write off R$700 million in shareholders loans and settle other outstanding TBCG debt of R$400 million.
In 2012, Tiger Brands bought a majority stake of 63.4% in Dangote Flour Mills, a Nigerian flour, pasta and rice company, for almost $200 million. The purchase has cost investors millions in write-downs.
The Tiger Brands statement said the transaction, which is subject to regulatory approvals, would “ensure that TBCG is maintained as a viable going concern, able to retain its employees and meet its obligations to its stakeholders.”
In November, Tiger reported for the TBCG segment a loss of R$438 million ($31 million) compared to a R$281 million ($19.9 million) loss in the same period of last year. As a result, Tiger pulled financial support for the business.
Tiger Brands has experienced its share of upheaval recently, including the overstatement of sales by Haco Industries, a Kenyan subsidiary of Dangote Flour Mills. The preinvoicing and manipulation of profits contributed to a 30% drop in operating profit in the international and export unit during the first half of the year ended March 31. Tiger Brands fired the managing director of the Kenyan unit.
In October, Tiger Brands Chief Executive Officer Peter Matlare said he was stepping down, effective Dec. 31.