Sale of Tobacco Leaf Limited Press Release

The Zambia Privatisation Agency is pleased to announce that the Minister of Finance Honourable R D S Penza has signed the sale agreement with Tobacco Association of Zambia for the sale of 100% shares in Tobacco Leaf Limited. Tobacco Leaf is situated in Lusaka along Mungwi Road.

Tobacco Leaf Limited was incorporated early this year to facilitate the privatisation of the tobacco processing plant previously owned by the National Tobacco Company Limited (NATCO) which was dissolved in 1994.

In order to promote the tobacco industry in Zambia, the Government decided that the processing plant be privatised by way of offering it to the tobacco growers. Along these lines the Tobacco Association of Zambia (TAZ), which has the majority representation of the tobacco growers, made a formal bid for the sale and purchase of the plant and negotiations were concluded with the ZPA for a total consideration of US$1,550,000 broken down as follows:

	US$
Payment due to the Privatisation Revenue Account	500,000
Capital expenditure investments and working capital	1,050,000
Total investment package	1,550,000

The proceeds from the sale of the shares of Tobacco Leaf Limited will flow in two stages as follows: 10% on signing the sale agreement and the balance to be paid in four equal annual instalments. However, the purchaser is desirous to pay the full purchase price at completion which is expected to take place within sixty days.

The transaction was negotiated by an independent team composed of Mr George Chibuye as the Team Chairman and Mr Bevin Willombe as the Team Lawyer, both individuals of high integrity appointed by the ZPA Board. The negotiators extensively used the valuation prepared by Deloitte & Touche and achieved an optimum price subject to the valuation.

TAZ will invest US$300,000 in the first year to rehabilitated the plant and will in conjunction with Contraf-Nicotex Tobacco of Germany incorporate a holding company to facilitate the operations of Contraf-Nicotex Tobacco, a business partner. The purchaser's business plan is an ambitious one aimed at immediate rehabilitation of the plant to internationally acceptable tobacco processing standards.

The ZPA is proud to state that Zambia is the first country in the Central and Southern African region where tobacco farmers own a factory for processing their product on commercial basis.

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