Tongaat Hulett outlines new restructuring plans

A newly established restructuring committee has taken over the task of improving debt and liquidity levels at sugar producer Tongaat Hulett.

The committee took over on July 15 and is expected to present a restructuring plan to the Tongaat board by September 30.

Tongaat Hulett’s market value took an almost 90% dive over a three-year period after it disclosed overstating its assets by up to R4.5-billion in its 2018 financials.

One of the largest employers on the North Coast, the company introduced stringent cutbacks in 2019 to avoid financial disaster in the wake of the accounting irregularities.

Last year it was announced that Mauritius company, Magister, would underwrite the company’s R4-billion rights issue, but the deal has since fallen through.

The comprehensive restructuring plan seeks to improve liquidity levels, reduce debt to sustainable levels and provide clarity on a way forward to stakeholders.

Tongaat Hulett was unable to release its provisional financial results for the financial year ended March 2022 by June as required by the Johannesburg Stock Exchange (JSE).

This was attributed to the board and auditor needing more certainty around debt referencing and balance sheet restructuring.

Neither the provisional 2022 financial statements nor the audited 2022 financial statements are expected to be finalised by the end of this month.

The company noted that the suspension of shares would have no material impact on its financial stability or business operations.

To allow sufficient time and resources to complete the restructuring plan, the company is in final negotiations with a lender group to replace it’s seasonal overdraft facility with a larger short-term ‘borrowing base’ liquidity facility.

CEO Gavin Hudson said they had generated momentum in the restructuring processes with a clear timeline and new resources to deliver the plan at the end of September.

“This plan will be critical in addressing our liquidity needs, reducing our debt to more sustainable levels and providing our employees and stakeholders with much-needed clarity. In the meantime, we remain committed to our employees, suppliers, customers, and wider stakeholders.”

Hudson said the company’s request to the JSE for voluntary suspension of trading of their shares is a purely procedural decision, which would protect shareholders.

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