Star Africa Corporation Limited in talk with an unnamed South African sugar producer

In a cautionary to shareholders today, starafricacorporation said it was still engaged in discussions that may result in transactions that could have a material impact on the value of the company’s shares.

“The board therefore advises shareholders to exercise caution when dealing in their starafrica limited shares and to consults their professional advisors before dealing in their shares until such time as the results of said discussions are known,” the company said in a statement today.

There has been speculation that a deal involving Tongaat Hullett announced at the firm's Annual General Meeting (AGM) in September last year was now being negotiated.

However, it was not immediately clear if this was related to the cautionary statement. But if it is, then it's likely to involve equity, as a loan discussion alone would unlikely prompt a cautionary statement.

Finance director, Regis Mutyiri had said at the AGM that raw sugar supplies had continued to affect operations at starafrica's Harare plant and that plans were underway to negotiate a loan facility with Tongaat.

The transaction involved the extension of a US$6,8 million revolving sugar facility to enable it to restart operations at the plant.

"The refinery is closed because of lack of raw sugar. The challenge with raw sugar is that we suffered some losses. Because of the losses our facility with the raw sugar supplier is utilised. With the work that we have done we are confident that if we get raw sugar supply we will be able to run viably," said Mutyiri.

starafrica, the country's only sugar refinery, requires between 1 500 tonnes and 2 000 tonnes of raw sugar per week to feed the market.

Most of it comes from Tongaat's Triangle and Hippo Valley operations.