Tongaat Hulett wants suspension lifted

TONGAAT Hulett, the sugar and property group, said it hopes to present a new restructuring plan by the end of the month, and has asked the JSE to lift its share suspension.

It said it expected that its annual results would reflect a lower earnings loss. This as it said it had secured a new R600 million funding facility, which was key to the restructuring plan, as it faces massive debt.

An initial restructuring plan approved by the board was expected to be available by September 23, which it was hoped would deal with the firm’s R6.3 billion debt in South Africa.

The troubled company is trying to set its house in order after an accounting scandal that led to its erstwhile directors returning to court on R3.5bn fraud charges.

“Progress with the debt restructuring plan has resulted in a new R600m Borrowing Base facility being concluded with the South African lender group, which will remain in place until September 30, 2022.

“An option to upsize the facility is being negotiated, subject to credit approvals. The South African lender group has also not enforced the contractually agreed interest rate margin increases to date,” it said in a statement late yesterday.

Tongaat said the intention was for the Borrowing Base facility by the lenders to be increased from R600m to R750m and extended to the end of the 2023 financial year, but this was dependent on the mutual agreement of the board’s restructuring plan.

In addition, the firm said negotiations with funders outside of the lending group to secure a further R750m were progressing.

“If both engagements are successful, the total liquidity requirements of the South African operations will be met for the 2023 financial year,” it said.

For the year ended March 31, 2022, the company flagged that its earnings loss was expected to narrow to between R1.3bn and R1bn, from R2.7bn the prior year.

Earnings loss per share was likely to be between 992 cents and 793c, down from 1 985c.

The headline loss was expected to be R912m to R852m greater than R593m the year prior. Headline loss per share was likely at 676c to 632c, higher than 440c the year before.

“As part of the transition to new auditors, the group revisited a number of complex technical accounting matters. This resulted in the restatement of the prior year’s financial statements. In aggregate, the restatements improve both earnings per share and headline earnings per share for the year ended March 31, 2021, by approximately 190c,” Tongaat said.

The firm said in an operational update that it had seen strong local demand across all the sugar businesses and good market share gains help offset an 8 percent reduction in overall sugar production, resulting in revenue generation in line with the prior year. Lower sugar production stemmed mainly from poorer agricultural performance in Zimbabwe and unsatisfactory milling performance in South Africa.

“The Mozambique sugar operations delivered excellent results,” it added.