SOUTH AFRICA – Shareholders of South African based diversified agribusiness firm, Tongaat Hulett have given it the greenlight to access new credit lines, which will help keep the company afloat.
Tongaat said shareholders representing more than 91% of shares voted in favour of its proposal to change the company’s memorandum of incorporation (MOI), the document that sets out the rules governing the conduct of each company in line with the Companies Act.
Tongaat announced in November that it was in talks with its debt providers in SA who had agreed in principle to make new loan, credit and overdraft facilities available to the company.
The company then asked its shareholders in November, 27 to vote on the proposal of changing its MOI, which is required to access the new credit facilities.
In June last year, the 127-year old company and biggest sugar producer in SA asked that its listings be suspended on the JSE and in London after accounting irregularities emerged.
Tongaat also has a massive debt burden, which according to restated financials amounted to more than R11bn (US$772.41m) last year.
The company said finance costs were placing it under severe liquidity constraints. The new facilities should help Tongaat execute a plan that will see it reduce its debt level by at least R8.1bn by September next year.
Tongaat had to restate its 2018 financials after the company uncovered dodgy accounting practices which included overstating assets and profits for years.
When it finally released its results for the year ended in March 2019, the company’s restated equity for 2018 dropped by more than R11.8bn (US$828.59m) to R62m (US$4.3m), as both its operating profits and assets turned out to be much less than it initially stated while its borrowings increased. This created negative equity of almost R3bn (US$210.65m).
In November, the company indicated plans of channelling off its 51% share interest in its Namibian business to Bokomo Namibia, a breakfast cereals company and division of Pioneer Foods Ltd for R220m (US$14.8m) in bid to reduce the group’s debt.