Artemis Investments has boosted its stake in Tongaat Hulett to 10%, the company said in a statement on Tuesday, putting it behind only the Public Investment Corporation (PIC) as the biggest shareholder and fortifying its weight in the strategic direction of the sugar maker.
The news was well received by the market as Tongaat’s share price surged 17.78% to R4.77 — the highest level in six months. It is up more than 80% since the Magister rights waiver deal fell through in late June.
Having fiercely championed the David and Goliath fight against Mauritius-based Magister gaining control of the 130-year-old company at a bargain price, Artemis has beefed up its stake in the KwaZulu-Natal-based company.
This will give Artemis investments, which holds numerous subsidiaries including Artemis properties, greater sway in the upcoming rights offer by which Tongaat plans to raise R5bn.
Other Tongaat shareholders include PSG Asset Management, Braemar Trading, Metal and Engineering Industries Benefit Funds and Sanlam.
Tongaat has been struggling to recover from an accounting scandal that cost shareholders billions in lost market value, with the board seeing the Magister-backed rights offer as the only way to meet its debt repayment commitments.
The company, which is also a key player in the Southern African sugar ecosystem with operations in Botswana, Mozambique and Zimbabwe, has debt of about R6.8bn.
Artemis led the charge in the review of the waiver ruling granted by the mergers & acquisition watchdog, the Takeover Regulation Panel, which would have allowed Magister to take up to a 60% interest without having to make a mandatory offer for the whole group.
Its unrelenting pushback was rewarded in June when the panel retracted its earlier ruling.
The waiver withdrawal made it all but impossible for Tongaat to carry out the rights offer by the end of June as one of the conditions for Magister underwriting the deal included Tongaat remaining listed on the JSE.
Tongaat said it is continuing to proactively engage with stakeholders regarding a capital raise transaction and a sustainable solution for the group.
Some investors have called for the company to consider other options such as approaching banks to convert the debt to equity, or selling off assets. However, the company is firmly of the view that a capital raise is a better alternative to strategic asset disposals, particularly an accelerated disposal programme which is unlikely to realise full value for the assets.
Tongaat has delayed the release of its financial statements for the year ended March 31, which were due by June 30 according to JSE rules. It recently appointed turnaround specialist Piers Marsden as its chief restructuring officer.
Marsden will work alongside a subcommittee of five, including executive director Rob Aitken, in a bid to map out a fresh survival plan and fix the company’s lopsided capital structure.
Former high-profile Tongaat Hulett executives, including former CEO Peter Staude and former CFO Murray Munro, have been criminally charged in an alleged R3.5bn fraud relating to sales of land owned by the company. The matter has been postponed to July 25.
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