DURBAN – Sugar producer Tongaat Hulett said on Tuesday that it had sold its 51 percent stake in Tongaat Hulett Namibia (THN) to Bokomo for R220 million to reduce its debt.
The group said the board decided to offload the business as it was not part of its core assets.
It said the disposal would allow the Namibian business to grow into new areas while facilitating Tongaat Hulett’s access to the market through long-term sugar and related products supply agreements concluded with Bokomo.
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“Tongaat Hulett, as 51 percent beneficial owner of the seller, will ultimately share in 51 percent of the proceeds from the sale, and assuming no post-closing adjustments are made to the purchase price, 51 percent of the proceeds will equate to R112m before deductions for taxes and transaction costs are made,” Tongaat said.
Tongaat Hulett said the transaction was conditional on certain conditions, which include the Namibian Competition Commission approval and the completion of a due diligence investigation into the Namibian business to the satisfaction of Bokomo by no later than November 30.
The group said the investigation was largely complete and the process for filing with the Namibian Competition Commission is under way.
Tongaat said the net asset value attributable to the Namibian business as at the end of March was R37.15m and its profit after tax R30.13m while attributable earnings were R15.37m.
On Monday Tongaat informed the market that its South African lenders had agreed to make new credit facilities available to it.
“Shareholders are advised that Tongaat Hulett has now entered into a detailed term sheet with the lenders in terms of which, rather than a standstill arrangement, the South African lenders have agreed in principle to make new senior term loan facilities, senior revolving credit facilities and overdraft facilities available to the company,” the group said.
It added that the new South African facilities would be used primarily to refinance amounts owing to the South African lenders under existing facilities and to fund general corporate and working capital requirements.
Tongaat has also been battling with its own accounting scandal that has forced it to restate its financial results.
Early this year it said the results for the year to end March 2018 would need to be restated, with an estimated reduction in the amount reflected in the 2018 financial statements as the company's equity as at April 1, 2018, anticipated to be between R3.5 billion and R4.5bn.
The group expects to release its restated statements for the year to end March 2018 and the financial statements for the year to end March 2019 next month.