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Tongaat Hulett progresses financial aid talks; to sell Namibia business

19th November 2019

By: Marleny Arnoldi

Deputy Editor Online

     

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Embattled sugar producer Tongaat Hulett has finalised a detailed term sheet with new lenders, whereby they have agreed, in principle, to make new senior term loan facilities, revolving credit facilities and overdraft facilities available to the company.

The new loan facilities will be used to refinance amounts that are due to other existing debt facilities and to fund general working capital requirements.

The company in July asked ten lenders for a break from payments on as much as R11-billion of debt so that it can recover from the impact of having to restate accounts.

The term sheet provides for timelines within which repayments must be made on the debt owing to the new lenders and contemplates that Tongaat will fund these repayments out of asset disposals and/or equity capital raisings. 

The term sheet will be expanded into full draft agreements once negotiations are finalised.

Meanwhile, the company said it continued to make significant progress in the implementation of its turnaround plan, which is aimed at reducing costs and re-baselining the company’s cost basis.

The various turnaround initiatives are geared towards delivering cash flow improvements above the budget baseline over a two-year period. With six months of execution already completed, meaningful progress has been made, and is currently tracking within 90% of year to date target.

Tongaat already started processes to dispose of certain noncore assets, which will be announced in due course. CEO Gavin Hudson previously said that businesses identified for disposal include packing plants in Botswana and Namibia and game farms in Mozambique and Zimbabwe.

The company on Tuesday announced that the sugar packaging and distribution business Tongaat Hulett Namibia, in which it holds a 51% beneficial interest, would be sold to Bokomo Namibia for R220-million. Tongaat will use its R112.2-million share of the proceeds to reduce its debt.

The company intends to publish its financial statements for the year ended March 31, 2019, on or about December 9. The publication of its results was delayed amid forensic investigations into the company’s governance and financial controls.

Moreover, Tongaat appointed Dan Marokane executive director with immediate effect, who will also serve as a restructuring officer.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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