JSE-listed Tongaat Hulett had, by March 31, paid debt reduction proceeds of R6.01-billion to its South African lenders, achieving its targeted debt reduction proceed plans.

However, debt reduction transaction agreements totalling R6.56-billion had been signed at March 31, which falls short of the R8.1-billion required.

To prevent a default, Tongaat and the South African lenders have amended the milestone measurement date from March 31 to April 30.

The parties are in advanced negotiations to amend the cumulative amount of the signed debt reduction transaction agreements from R8.1-billion to R6.4-billion, which will allow Tongaat to meet the milestone.

The June 30 milestone remains unchanged and still requires Tongaat to sign cumulative debt reduction agreements amounting to R8.1-billion.

As certain of the facilities mature on September 30, negotiations with the South African lenders have begun, to implement a debt refinance.

In its interim financial results released on December 11, 2020, Tongaat indicated that debt reduction transactions totalling R6.4-billion had been concluded, with R5.76-billion thereof having been paid to the South African lenders pursuant thereto.

Moreover, Tongaat had agreed in principle to a second restructure of its existing debt facilities and concluded the agreement with the South African lenders on November 4.

SOUTH AFRICAN SUGAR OPERATIONAL UPDATE

To honour the sugar industry’s commitments in terms of the Sugar Master Plan and supply the 100 000 t (13%) increase in refined sugar needed, it became necessary to keep the refinery running and delay the planned yearly maintenance shutdown for the 2021 financial year to the off-season period.

Consequently, actual production of refined sugar for the 2021 financial year increased by 40% to more than 450 000 t, against a previously planned production level of 304 000 t.

However, the extra pressure of this production ramp-up on the refinery led to increased production costs and process inefficiencies and resulted in a 25 000 t sugar production loss.

This will have a material impact on the full year financial results of the South African sugar operations, though the amount thereof has not yet been fully quantified, the company says.

It notes that significant steps have been taken during the recent maintenance shutdown to rectify and enhance the refinery processes and controls in order to prevent a reoccurrence.

Shareholders are advised to exercise caution when dealing in Tongaat’s securities until the amount of the full impact of the loss has been quantified.