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Tongaat Hulett shareholder Artemis backs investors in bid to stall rights offer

LAST month Tongaat’s announcement of a R4 billion rights offer wiped off more than a quarter of its market value in a day as investors had expected the company to avert such an offer or, at worst, seek one worth around R2bn. Photo Supplied.

LAST month Tongaat’s announcement of a R4 billion rights offer wiped off more than a quarter of its market value in a day as investors had expected the company to avert such an offer or, at worst, seek one worth around R2bn. Photo Supplied.

Published Dec 8, 2021

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JOHANNESBURG - Artemis Investments, a major shareholder in Tongaat Hulett, has offered its backing to a group of minority investors upset with the timing and size of a rights offer, which South Africa’s top sugar producer announced last month, investors told Reuters.

Artemis, a top four shareholder with a stake of 8.33 percent, will support a group of minority investors represented by Retail Investment Corporate Holdings (RICH), said that group’s leader, Harry Smit, and Artemis director Charles Liasides.

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The shareholders would seek to reach a total equity stake of 10 percent in Tongaat and gradually increase it, Smit said.

“Unless you have a minimum of 10 percent shareholding, it is difficult for us to get a voice,” Smit said, adding that the size and timing of the rights offer would be among his first questions to the management.

He said a 10 percent stake would give him substantial backing to reach out and persuade other shareholders to vote against the rights offer.

Smit’s RICH group intends to sell some of its other investments to increase its stake in Tongaat to be able to engage with management and oppose the rights issue.

Last month Tongaat’s announcement of a R4 billion rights offer wiped off more than a quarter of its market value in a day as investors had expected the company to avert such an offer or, at worst, seek one worth around R2bn.

The rights offer, if successful, could effectively give control of the company to an unlisted entity, Magister Investments.

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Liasides, from Artemis, said he had been raising the same issues with the management.

He said he did not sign Tongaat’s irrevocable letter of undertaking on November 9, which would have given his support to the rights offer.

In a letter sent to Tongaat chairman Louis von Zeuner on November 22, seen by Reuters, Liasides objected to the company’s rights offer calling it “extremely dilutive to all existing shareholders”.

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The chairperson’s response letter, seen by Reuters, said the company was in closed period due to its interim results, but gave the assurance that in due course more details would be revealed.

Liasides said the rights issue could effectively dilute his 8.33 percent holding in the company to just over 1percent if he didn’t subscribe to the issue.

In an emailed response to Reuters, a Tongaat spokesperson said the company’s financial results on December 9 would include supplemental information on the rights offer.

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REUTERS

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