Shares in sugar producer Tongaat Hulett fell by nearly 17 percent on Tuesday morning following the announcement that the sale of its starch business to a subsidiary of Barloworld had hit a snag.

Tongaat had announced in February that it would be selling its starch business to the KLL Group for R5,35 billion.

The transaction hinged on the undertaking that no “material adverse changes” should occur after the signing of the agreement that could affect the business.

In a statement on Tuesday, the country’s largest sugar producer said the KLL Group felt that the effects of Covid-19 were likely to negatively impact the business and result in material adverse changes.

According to Tongaat, KLL believes the earnings of the starch business for the financial year ending March 2021 would be 82,5 percent or less compared to the 2020 financial period, in what would diminish value for the transaction. — Bloomberg.