Just in: Tongaat Hulett secures shareholder approval for controversial rights offer

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Just in: Tongaat Hulett secures shareholder approval for controversial rights offer

4:27 CAT | 18 Jan 2022

FILE PHOTO - Xinavane, Mozambique. [File photo: Zambeze]

Embattled JSE-listed sugar producer and property owner Tongaat Hulett on Tuesday secured enough shareholder support for a controversial multi-billion-rand capital raise or rights offer, which will involve Zimbabwe’s billionaire Rudland family.

This came despite calls by some shareholder activists, such as David Woollam and Chris Logan, to get the vote postponed by arguing that shareholders did not have sufficient information on the offer and on Mauritian-based Magister Investments Limited, which is a privately-held group controlled by the Rudlands.

Magister is led by Hamish Rudland, the brother of controversial tobacco tycoon Simon Rudland, who is a shareholder of Gold Leaf Tobacco.

The vote on the rights issue took place at a special or extraordinary general meeting (EGM) of Tongaat Hulett shareholders on Tuesday morning.

While the final details of the capital raise (such as share price) are yet to be finalised, one of the resolutions shareholders also had to vote on was related to appointing Hamish Rudland as a new director on the Tongaat Hulett board as part of the proposed deal.

Tongaat Hulett is eyeing a capital raise of between R2 billion and R4 billion.

As part of the Magister proposal, Tongaat Hulett noted in a statement (when the offer was first announced in November 2021) that the “proposed major recapitalisation via a rights offer of new shares” would be partially underwritten by Magister up to R2 billion.

This is “provided that its total shareholding in Tongaat does not exceed 60% immediately following implementation of the rights offer and the underwrite,” the KwaZulu-Natal-based group pointed out at the time.

The rights issue is being put forward by the Tongaat Hulett board as a last resort to address the group’s still significant debt burden, which stands at around R6.5 billion, following the accounting scandal that rocked the group three years ago.

Several former executives have been implicated and the group was forced to restate its financial results for two prior years.

Tongaat Hulett’s new executive leadership, led by CEO Gavin Hudson, have managed to slash the group’s debt from over R11 billion following the restatement. This includes the more than R4 billion sale of its starch business to Barloworld.

However, with the group’s market capitalisation is currently only around R740 million, its current R6.5 billion debt remains an unsustainable bugbear for Hudson and the board.

By Suren Naidoo

Source: Moneyweb