Embattled Tongaat Hulett, which has had to scrap plans for a R5 billion rights issue, has asked the JSE for a temporary suspension of its shares while it undergoes a restructuring aimed at alleviating liquidity and debt problems at southern Africa’s biggest sugar producer.
The share price fell 8.52 percent to R3.22 on Friday on the new, this after the share price had risen sharply from R2.66 on June 1 up to R4.77 on news that a minority shareholder Artemis had upped its stake in the group to 10 percent, and that the controversial plans for a rights issue had been terminated.
The group admitted Friday that a longer-term financial solution is required for Tongaat Hulett’s audited annual financial statements to be finalised, and this was largely dependent on the outcome of the restructuring plan.
Tongaat was unable to release its annual financial results for the year to March 31, 2022 by June 30, as required by the JSE until the board and auditor achieved more certainty around debt refinancing and balance sheet restructuring,
The company’s newly established restructuring committee would present a restructuring plan to the board by September 30 which would aim to improve liquidity, reduce debt to sustainable levels and provide clarity on a way forward for the company to all stakeholders.
“While every effort is being made to finalise the restructuring plan as soon as possible, it is clear that neither the Provisional 2022 Financial Statements nor the Audited 2022 Financial Statements will be finalised by July 31, 2022,” the group said on Friday.
Tongaat said a suspension of the shares would protect the interests of current and potential shareholders as the company engaged with multiple parties on solutions to progress the restructuring.
The JSE on Friday confirmed it is considering the request for suspension and its decision would be communicated as soon as possible.
A suspension would have no material impact on the company’s financial stability or its business operations.
To allow sufficient time and resources to complete the restructuring plan, negotiations were under way with the South African lender group to replace the seasonal overdraft facility with a larger short-term “borrowing base” liquidity facility.
Tongaat CEO Gavin Hudson said in a statement: “We have generated further momentum in the restructuring process with a clear timeline and new resources to deliver the restructuring plan at the end of September. We are grateful to our employees who are focused on producing sugar as efficiently as possible.”
He said the request to the JSE for the voluntary suspension of trading in the shares “is a purely procedural decision” to protect shareholders and stakeholders “as we engage widely to progress our restructuring plans.”
“By progressing a comprehensive restructuring solution, we are working to create a long-term future for the company, and the half a million people which depend on it across Southern Africa,” Hudson said.
BUSINESS REPORT