KLL Group, a wholly owned subsidiary of Barloworld, has issued a second material adverse change (MAC) notice with regard to Tongaat Hulett’s disposal of its starch business as a going concern.
The first MAC was issued in May, wherein KLL stated that the global Covid-19 pandemic and the consequences thereof was likely to cause the earnings before interest, taxes, depreciation and amortisation (Ebitda) of Tongaat’s starch business for the financial year ending March 31, 2021, to be 82.5% or less of the Ebitda of the starch business for the financial year ended March 31, 2020.
Therefore, KLL was of the view that a MAC has occurred.
However, owing to a dispute regarding the focus of the independent expert’s determination, and in order to deal with the substantive matters in dispute without delay and on an expeditious basis, KLL Group has issued another MAC notice.
Tongaat disputes that there has been a MAC, and the parties have agreed that the dispute resolution process followed to date will have a single consolidated determination by the independent expert, and the sole dispute is to be decided by the expert whether or not an MAC has occurred.
As such, the disposal of the starch business remains subject to conditions precedent, including a determination of the MAC dispute.
Rothschild & Co South Africa has been appointed as the independent expert.
In the interim, Barloworld has confirmed, in a separate statement, that it continues to perform its obligations in terms of the sale and purchase agreement.
The company has also confirmed that the transaction cannot be concluded until the MAC dispute is determined, as it is a suspensive condition to the agreement that no MAC occur.