Sugar producer Tongaat Hulett has applied to the JSE to suspend trading in its shares as it progresses with a restructuring plan. 

CEO Gavin Hudson confirms in a statement released on July 15 that the restructuring plan will be delivered at the end of September.

He affirms that the voluntary suspension of trading in its shares is a purely procedural decision to protect shareholders as the company engages with multiple parties on solutions to progress its restructuring.

The restructuring seeks to realise a long-term future for the company by improving liquidity levels and reducing debt. The plan includes negotiations with its South African lender group to replace Tongaat’s seasonal overdraft facility with a larger short-term borrowing base liquidity facility.

Tongaat was unable to release its provisional results for the financial year ended March 31 by June 30, as required by the JSE, and will also not be able to finalise both its 2022 financial provisional financial statements or 2022 audited financial statements by July 31.

Hudson says the trading suspension on the JSE will have no material impact on the company’s financial stability or business operations.

Tongaat says it remains committed to open and transparent engagement with all stakeholders and is working to resolve the challenges that confront this “critically important” business.

The company in June established a restructuring committee as an additional subcommittee of its board of directors to oversee and approve negotiations and the consensual development of a plan to reduce and repay debt to reach sustainable levels.

Tongaat also appointed Piers Marsden as chief restructuring officer and chairperson of the restructuring committee.

Tongaat’s debt is about R6.8-billion.

The company in 2019 launched various investigations into past financial activities and found that senior executives had initiated or participated in undesirable accounting practices, as well as that there was a culture of deference and lack of challenge at Tongaat, resulting in employees following instructions on accounting practices without questioning the basis for these.

There were also a number of governance failures found pursuant to internal policies, guidelines and frameworks not being followed. It has since been undergoing a major overhaul of policies, operations and executives.