SOUTH African agriculture and agri-processing firm Tongaat Hulett Limited’s competition filings by its Zimbabwe and Mozambique subsidiaries still await approval, delaying a debt-to-asset swap with Vision Group.
Vision, a South African investment consortium, is in the process of purchasing Tongaat’s assets through a debt-to-asset swap worth ZAR5,9 billion (US$330,05 million).
Tongaat shareholders rejected a debt-to-equity deal on August 8, with Vision, which would have given the latter a 97,3% stake in the former, leaving the debt to asset transaction as the only viable option.
Both the debt-to-equity and asset deals were made as part of Tongaat’s business rescue plan entered in January, after the firm’s total claims and debt reached ZAR13 billion (US$726,75 million) in October 2023.
Locally, Tongaat operates through its wholly owned Triangle sugar operation and a 50,3% shareholding in the agriculture and agro-processing firm, Hippo Valley Estates Limited.
“The relevant regulatory authorities are being consulted on an ongoing basis in order to arrive at the most expeditious and efficient methodology for implementing the asset transaction. The Zimbabwe competition filing was submitted in mid-July 2024,” Tongaat said in an update of the business rescue plans last Friday.
“The Mozambique competition filings were made on September 2, 2024. Both of these approvals are pending approval by the respective competition authorities.
“Vision continues to cooperate fully with the business rescue plans and executive management of the company to bring implementation of the asset transaction to a close as soon as possible.”
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Tongaat said there was a core team focused on satisfying the conditions on which the plan was contingent and ensuring the implementation of the underlying transaction.
“The asset transaction is a complex multi-jurisdictional transaction requiring consideration of, inter alia, the regulatory requirements and implications in each jurisdiction in which the business and assets of the company are located . . .,” Tongaat said.
“. . . tax optimisation, consideration of licensing and permit/authority requirements, required land transfers, assignments of contracts and requisite counterparty consents, employee transfers, interactions with key stakeholders (including the lender group, the IDC and shareholder bodies) and consideration of complex legal issues including the interplay between various items of different legislation. The IDC refers to the Industrial Development Corporation of South Africa Ltd, while the lender group is the group of lenders to Tongaat who are all secured creditors.
“Since the resolutions put to shareholders at a special general meeting of the company held on August 8, 2024 failed to pass, the legal, commercial, tax, regulatory and other professional teams advising the business rescue plans, Vision, the lender group, and the IDC, have been interacting, on an ongoing basis, multiple times each week, to progress the asset transaction and work through and resolve the structural issues,” Tongaat said.
“Significant progress has been made in identifying and resolving the structural issues. The transactional structure has been identified and is being refined. The commercial agreements required to document the same are being negotiated, drafted and exchanged between the relevant counter parties and no significant commercial impediments have been identified to date.”
Tongaat said the lender group had confirmed to the business rescue plans that they too were unaware of any impediments to the implementation of the asset transaction.
