Tongaat Hulett had been far from accurate to the market by claiming it had terminated its underwriting agreement with Magister because of delays in the regulatory approval for the proposed R5 billion rights issue, a shareholder said on Friday.
“It was the TRP (takeover regulation panel) that ended the Magister underwriting agreement with their ruling of June 2, 2022. Tongaat chose not to appeal this ruling even though the circular allowed for the June 30, 2022 long stop date to ‘be extended on one or more occasions’ unilaterally by Tongaat,” Opportune Investments chief investment officer Chris Logan said.
“Extensions are standard provisions often used by companies, in the event of regulatory or other delays. In a company that is recovering from massive fraud, Tongaat should be particularly sensitive to provide the market with accurate information, not Alice in Wonderland stuff,” said Logan.
Tongaat yesterday declined to comment for legal reasons. The TRP had found that Magister had been acting in concert with other shareholders in the proposed rights issue, and that a waiver for it to make a mandatory offer to minority shareholders could not be upheld.
Logan said the Financial Markets Act mandated the accurate flow of information, and even if they provided the information on in error as was possibly the case, they needed to correct it.
The TRP had ruled that Magister had been acting in concert with other shareholders in the proposed rights issue, and that a waiver for it to make a mandatory offer to minority shareholders could not be upheld.
Tongaat said on Friday it and Magister had agreed to terminate the dealings between them “to avoid further unnecessary regulatory delays.”
Tongaat said progress on the proposed rights issue had been slowed by regulatory processes including a hearing required by certain shareholders before the Takeover Special Committee, and longer than expected time lines in obtaining the approval of the Zimbabwean Competition and Tariff Commission.
As a result, the conditions precedent had not yet been fulfilled, and Tongaat did not anticipate that those conditions would be fulfilled on or prior to June 30, 2022, it said.
Meanwhile, news of the termination of the agreement, and establishment of a new board committee, the restructuring committee, and the appointment of Piers Marsden as chief restructuring officer (CRO), sent the sugar and property group’s share price surging 4 percent on Friday to R2.60.
The committee and newly formed position of chief restructuring officer were aimed at intensifying the focus on the turnaround, due to the delay in implementing a R5bn rights offer.
Tongaat CEO Gavin Hudson said: “Today, we have taken some very important steps to secure the future of this company in the light of the Magister development and as the delay in the rights offer requires us to bring in extra resources to further accelerate our restructuring plans.”
He said lenders were supportive of Tongaat, and the company was engaging with them and other parties to provide liquidity, to give the company additional time as it worked on a more comprehensive restructuring solution.
“The CRO we have appointed has a strong track record in turning around and restructuring companies and we have a clear intent to move forward,” Hudson said.
Marsden specialises in improving corporate performance, executing turnarounds, and restructuring corporate debt, having previously acted on behalf of Cell C, Ascendis Health, Edcon, Highveld Steel & Vanadium and Optimum Coal among others.
The appointment would also allow Tongaat’s executives with additional capacity to focus on strategic progress, operational issues, and day-to-day management of the group, said Hudson.
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