Sugar giant Tongaat Hulett is weighing up the next course of action after the mergers & acquisitions watchdog last week delivered a setback to its fundraising plans, CEO Gavin Hudson writes in Business Day on Thursday.
The takeover regulation panel, an agency of the trade, industry & competition department, scuppered Tongaat’s plans to raise R4bn via a rights issue underwritten by Magister Investments last week when it nullified an earlier ruling that the Mauritius-based company would not have to make a mandatory offer to minorities.
The equity capital raise, which would have given Magister a controlling stake in Tongaat, was dependent on Magister not making a mandatory offer, which under SA’s capital markets is triggered when a company buys 35% or more of another company. The panel revoked its earlier ruling after its investigation showed an investor related to Magister had been buying Tongaat shares after the announcement of the fundraising effort.
"Tongaat is now considering the ruling to decide on our course of action. We will make a further announcement to our shareholders in due course," Hudson writes in Business Day, adding that a capital raise is a better bet than disposing of strategic assets.
"Without a successful recapitalisation, the legacy we have worked so hard to build will be at risk, as well as our ability to extend the foundations of this legacy."
The 130-year-old sugar mill company, which is recovering from the second-largest corporate scandal in SA since Steinhoff, has a R6.8bn debt burden.
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