CAPE TOWN – Tongaat Hulett is cutting its exposure to sugar cane farming and renegotiating debt facilities as part of a restructuring following its suspension from the JSE due to accounting irregularities.
A forensic review conducted by PricewaterhouseCoopers had been completed and received by Tongaat’s board, and an overview of the review would be provided to shareholders at an appropriate time, a statement said.
In addition, “good progress” had been made on a turnaround plan which would affect most parts of the business, including broad-based economic empowerment initiatives.
Chairperson Louis Von Zeuner said: “The process to identify the restatements has been thorough, with the right level of governance, as we are cognisant of the need to provide stakeholders with reliable financial information. We will update the market on the release date for the March 2019 financial statements as soon as practically possible.”
Part of the turnaround process under way was the cutting of its direct sugar cane farming activities in South Africa, and the number of jobs lost would depend on the farm sales and extent of hectares sold, a spokesperson said yesterday.
Negotiations with South African and Mozambican debt providers on the restructure of short- and long-term debt facilities were progressing well. Debt stood at $793million (R12.05billion) in July, 2019. Liquidity and solvency was being closely monitored.
The strategic review had suggested alternatives to reduce debt: the possible sale of assets, a possible equity capital raise or a combination thereof were being considered.
The internal review had necessitated amendments to accounting practices and, as a result, the release of the audited March 2019 financial statements would extend beyond the previously anticipated October 31, 2019.
Tongaat’s South African sugar operations encompass 119000 hectares of which 8400 hectares are owned and farmed by the company, 61500 hectares are owned and farmed by white commercial farmers and 49300 hectares are owned and farmed by previously disadvantaged individuals (PDIs).
Tongaat planned to shift the PDI supply mix towards a 50percent share.
A company, FarmCo, had been established as a transformation initiative to ensure that land which had been targeted for future property development, remained productive under sugar cane.
Numerous farms would transition through creating opportunities for third party growers to farm company owned land, mitigating potential job losses at farm level.
To make the transformation initiative a reality Uzinzo Sugar Farming was created, which would enable shareholders to lease three prime agricultural estates at below market-related rental.
The leased area was about 3900 hectares with an estimated annual production of 160000 tons of sugar cane, making Uzinzo Sugar Farming one of Tongaat Hulett's top five largest supplying growers.