Debt-laden sugar producer Tongaat Hulett has told shareholders that its long-awaited restructuring plan will be delivered two weeks later than anticipated.
The JSE suspended the sugar mill giant from trading on the local bourse in July for failing to publish its provisional results on time, just weeks after turnaround specialist Piers Marsden was appointed chief restructuring officer in June.
In a Sens statement on Wednesday, the 130-year-old company said its restructuring plan, which seeks to reduce excess debt and ensure the group’s longer-term sustainability, would be delivered on October 14 and not September 30 as initially anticipated.
It said management and the board needed to review alternatives and design and agree on a plan that will provide an optimum solution for all stakeholders .
“The board and management team continue to progress the turnaround and restructuring plan,” CEO of Tongaat Hulett, Gavin Hudson said.
“The final restructuring plan will be based on work to assess a wide array of options for the optimal future of the business,” he said adding that no final decisions have been made at this time.
The publication of the annual results for the year ended March 31 is dependent on the approval of the restructuring plan.
The future of Tongaat, a key player in the Southern African industry with operations in Botswana, Mozambique and Zimbabwe, has been in doubt since early 2019 when it disclosed holes in its balance sheet due to the overstatement of profits, assets and revenues in previous years.
The company is choking on a debt pile now estimated at about R6.3bn. The debt was about R1bn more than it was a year earlier due to lower sales and slower-than-expected progress in selling properties in KwaZulu-Natal.
The takeover regulation panel, an agency of the trade, industry and competition department, scuppered Tongaat’s plans to raise R4bn via a rights issue underwritten by Magister Investments in May when it nullified an earlier ruling that the Mauritius-based company would not have to make a mandatory offer to minorities.
Among the alternative solutions put forward by shareholders is to approach the banks to convert debt to equity, or to sell assets including its Mozambique operations.
Tongaat has said that its plan looks at options including an equity capital injection by strategic partners at various levels within the group, the disposal of some or all of the African operations, or a combination thereof.
It said that when assessing the disposal of the African operations, a key consideration was the ability of the SA operations to function as a listed entity on a stand-alone basis, and the ability to fund the necessary reinvestment to be sustainable in the long term.
If the sugar company cannot be stabilised, it could affect up to 500,000 jobs across its supply chains in the Sadc region.
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