- Tanganda Tea’s US$8 million rights issue is fully underwritten by Rutanhi Beverages, guaranteeing the capital raise regardless of shareholder participation
- Rutanhi’s underwriting could increase its ownership stake, potentially giving it significant influence or control over Tanganda if minority shareholders fail to take up their rights
- The recapitalisation is aimed at stabilising Tanganda’s liquidity and operational needs, including working capital and essential replacement projects, rather than funding growth
Harare - Tanganda Tea Company, the leading diversified tea enterprise listed on the Zimbabwe Stock Exchange, has introduced the possibility of a shift in control after securing full underwriting for its US$8 million rights issue, according to the latest circular.
Through obtaining full backing from Rutanhi Beverages, the company has guaranteed the success of the capital raise, regardless of whether existing shareholders exercise their rights.
Rutanhi Beverages is a Zimbabwean beverage and agro-processing group with existing strategic interests in Tanganda. Prior to underwriting the rights issue, it already held a significant equity stake, positioning it as both a commercial counterparty and an insider investor.
This development could significantly alter Tanganda’s ownership structure, positioning Rutanhi as a central influence if minority shareholders fail to participate.
The recapitalisation addresses a prolonged deterioration in Tanganda’s liquidity position rather than a one-off financial shock.
The company has disclosed a cash-flow deficit of approximately US$6.36 million, originating in the Covid-19 period and compounded by subsequent operational and macroeconomic pressures.
Plantation agriculture is capital-intensive, with long cash conversion cycles extending up to 15 months, these structural characteristics have collided with a volatile operating environment, creating an urgent need for balance-sheet repair.
Climate disruptions including El Niño conditions, hailstorms, and biennial bearing in macadamia orchards have made output unpredictable, while international commodity prices for tea and macadamias have softened.
Energy costs have risen sharply, prompting investment in alternative power generation to maintain production continuity. However, the lack of grid-tie infrastructure has limited the effective use of installed solar capacity, muting returns on capital spend.
As of September 2025, Tanganda’s bank borrowings stood at US$7.1 million, with monthly servicing costs of roughly US$335,000. In an environment of uneven cash inflows and rising operating costs, debt has become a constraint rather than a financial tool, increasing the urgency of recapitalisation.
Most of the funds raised are to be earmarked for working capital, including fertilisers, chemicals, fuel, packaging materials, and supplier obligations.
A smaller portion will allocated to necessary replacement capital expenditure, such as the Tingamira water bottling plant and a modular macadamia cracking unit. These projects are defensive, aimed at preventing operational degradation and margin erosion, rather than driving growth.
The recapitalisation is designed to stabilise the business rather than reposition it.
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