The Vision Consortium (VC) is optimistic that the shareholders will support the debt-equity swap proposed in Tongaat Hulett’s subscription offer when they vote on Thursday.
Should Tongaat’s shareholders, which include the Public Investment Corporation (PIC), Rudlands, Artemis, and PSG, approve the debt-equity swap, the Vision Consortium will gain 97.3% of the shares, with existing shareholders retaining just 2.7% of the JSE-listed shares.
On the other hand, if the shareholders reject the swap, the Vision Consortium will opt for a debt-to-asset swap involving all Tongaat’s operating businesses in different regions, leaving existing shareholders with nothing.
In January, creditors gave the green light to Vision’s plan to save the company by purchasing its estimated R8bn debt and converting it into equity through a debt-for-equity swap.
To strengthen and improve Tongaat’s balance sheet, Vision has proposed a debt-to-equity swap amounting to R5bn while retaining R3.6bn as debt, in the process improving the company’s balance sheet.
“Vision and Tongaat Hulett both believe that the long-suffering shareholders should be given a chance to salvage some value and play a part in the company’s future,” said VC spokesperson Rob Bessinger.
Bessinger told Business Day that several efforts have been undertaken so far. Tongaat and the business rescue practitioners have reached out to all major shareholders to ensure they have received and understood the JSE circular. Also, Tongaat has enlisted a service provider to extend these communications to as many remaining shareholders as possible.
When asked about the effect of failed rival bidder RGS of Mozambique and the media campaign using Powertrans as a proxy on the consortium’s strategy or confidence in the approval process, Bessinger said it was regrettable.
He said Vision believed the baseless and disruptive attempt might mislead some shareholders and stakeholders into thinking that the approved plan is either failing or will fail, or that the failure to pass the shareholder resolutions would result in the collapse Vision’s plan.
Powertrans Sales and Services, one of Tongaat’s smaller creditors, claims that Vision’s purchase of Tongaat was conducted in such a way that it would lead to a slow but inevitable liquidation. The company applied for an urgent interdict to stop VC’s purchase of Tongaat, arguing that it cannot save the troubled group.
“It’s deliberate and misguided as the Vision plan implementation will continue notwithstanding a failed vote. Powertrans have never put an alternative plan on the table and RGS, the controversial Mozambique entity that had to withdraw from the business rescue process in January once its fraudulent activity and behaviour became known, is once again attempting to be a spoiler,” said Bessinger.
SA had already endorsed the acquisition by the consortium, while the Botswana and Zimbabwe applications had been submitted and responses were awaited, he said, with the Mozambique premerger filing meeting scheduled for mid-August and submission would follow thereafter.
VC describes itself as being made up of entrepreneurial families including that of Gumede and Zimbabwean Rute Moyo and includes Samancor Chrome owner Terris; Mauritius-based investment holding company Remoggo; and Almoiz, one of the largest agribusiness groups in Pakistan.
On the long-term benefits that the consortium expects from the approval and implementation of the subscription offer, Bessinger said that it had completed due diligence on all Tongaat operations, engaged and aligned with its management on key priority areas which continue to be refined and will be included in the 2025/29 business plans.
“These include exiting business rescue, recapitalising the business directly by reducing debt and lowering the cost of capital, filling key management positions, improving key stakeholder relationships, expanding area under cane, improving yields across the value chain as well as profitable and sustainable diversification into energy and other by-products from the processing of the cane,” Bessinger said.
He said Vision was pleased to have preserved more than 32,000 jobs and saved the largest sugar company in Africa. Tongaat produces more than 40% of SA’s sugar and supports small-scale black sugar cane growers. Additionally, it is the second-largest employer after the Mozambique and Zimbabwe governments.
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