Pfunda Tea Estate sold to Lab International

L.A.B International, a London-based company is to buy 35 per cent shares in Pfunda Tea Estate after cabinet approved the deal. The consortium acquired the equity value in Pfunda after paying $668,906 (Frw364m) to government. LAB international has been holding 55 per cent shares in the tea estate which it acquired in 2004 at $1m. Since then, the company has been involved in discussions with government to increase its shares in the tea company. The purchase means LAB has increased its equity stake to 90 per cent leaving government with only 10 percent. Government plans to sale the remaining shares it owns in the Gisenyi based company to local farmers. Information from the Rwanda Pivatisation Secretariat indicates that the entity value of Pfunda Tea Estate agreed between the government and LAB international is Frw1 billion while 35 per cent shares where valued at Frw364m. The net asset value of Pfunda is Frw583.5m while its capitalisation earnings is Frw883.6m and discounted future earnings are estimated at Frw1 billion. The sale is part of Government’s move of pulling out of doing business. But as Government privatises public companies, investors in tea are compelled to grow tea on the core plantation and also buy from out growers. The enterprises are also required to provide credit in kind and extension services to the growers. According to Rwanda Tea Authority (OCIR THE), the move is to increase the processing capacity of the factory while retaining the high quality of Rwanda’s tea. LAB International is among the foreign companies that have shown interest in Rwanda major tea estates. Others are the deep pocketed Dubai World— an investment arm of United Arab Emirates (UAE) government. They are intereted in buying Gisakura Tea Estate in the Western region and Kitabi in Southern region. Others are interested in Gisovu Tea Factory, with the best tea at the Mombasa auction market. According to the Privatisation Secretariat, these investors are supposed to submit their technical offer next month, and thereafter negotiations will start. This year government expects to privatise other tea factories which include, Mataf Shagasha and Mulindi.Export. Last year, the value of tea export earning hit a record $42m compared to $32m in 2006, however this year tea exports are expected to fall by $1.8m to $40.2m. Ends