Tongaat shares dive 27% as it staves off debt
TONGAAT Hulett’s share price tumbled by more than 27 percent on the JSE after the troubled sugar producer and agri-processing company said yesterday that it had amended its debt reduction milestone to prevent a default.
The share plunged to a low of R7.55, ending up closing the day 22.8 percent lower at R7.99.
Tongaat was rocked by an accounting scandal in 2019 and an investigation by PricewaterhouseCoopers revealed that some of its former executives were responsible for overstating assets and profits by using “undesirable accounting practices”.
The group implemented a turnaround strategy under chief executive Gavin Hudson, but a huge debt of around R13bn has remained a sore thumb for the group.
Tongaat said yesterday it paid debt reduction proceeds of R6.01 billion to the South African lenders at the end of March, which resulted in it achieving the R6bn debt reduction proceeds milestone.
However, it said debt reduction transaction agreements totalling R6.56bn had been signed at the end of March, but they fell short of the R8.1bn required.
“In order to prevent an event of default, Tongaat Hulett and the South African lenders amended the milestone measurement date from March 31 to April 30. The parties are in advanced negotiations to amend the cumulative amount of the signed debt reduction transaction agreements from R8.1bn to R6.4bn, which will allow Tongaat Hulett to meet the milestone,” the group said.
Tongaat said the facilities matured at the of September 2021 and negotiations with the South African lenders had commenced to implement a debt refinance and a further announcement would be made once this has been agreed.
It was in negotiations with the South African lenders for the facilities that expire at the end of September and would update its shareholders once an agreement was reached, it said.
Tongaat also said it had to delay the planned annual maintenance shutdown for the 2021 financial year until the off-season period in order to keep its commitments of supplying 100 000 tons of refined sugar based to the industry as per the Sugar Master Plan.
“Consequently, actual production of refined sugar for the 2021 financial year increased by 40 percent to more than 450 000 tons, against a previously planned production level of 304 000 tons,” the group said.