Big blow to Tongaat takeover
Company clings to assets
The company is buckling under a R6.8 billion debt burden and hoped that a rights issue, and the effective takeover, would save it.
Despite a potentially lethal blow to a planned rights issue and takeover of the company, Tongaat Hulett says it remains committed to a recapitalisation – and doesn’t want to sell its assets.
The company is struggling under a R6.8-billion debt burden, and hoped that a rights issue of up to R5 billion would provide a reprieve.
Mauritius-based company Magister Investments – which has close ties to the Zimbabwean Rudland family, which owns the controversial cigarette group Gold Leaf Tobacco Corporation - has committed some R2 billion to underwrite the rights issue, which will see it potentially take control of the sugar and property group.
But on Thursday, the Takeover Regulation Panel (TRP) issued a ruling that put this arrangement in jeopardy.
According to law, if a company – and any party acting in concert with the company - buys more than 35% of a company, the company is forced to make an offer to all shareholders to buy them out.
CONDITIONS
One of the conditions of Magister’s takeover of Tongaat is that it wouldn’t have to make this mandatory offer.
And in January, Tongaat shareholders voted to waive their right to this mandatory buy-out offer. But a group complained that close associates of Magister have been buying Tongaat shares in the run-up to the shareholder vote, to help sway the vote.
The TRP found that these third parties and Magister were indeed in concert and nullified the waiver.
On Friday, Tongaat said in a statement that it was not involved in the third-party share acquisitions, and only became aware of them after they had occurred.
Tongaat and Magister now have five business days to apply for a hearing over the ruling. Tongaat said it was still studying the ruling, but that it remained committed to a recapitalisation.
"[Tongaat Hulett] remains firmly of the view that a capital raise is a better alternative to strategic asset disposals, particularly an accelerated disposal programme, which is unlikely to realise full value for the assets."
The investigative news outlet amaBhungane reports that Ebrahim Adamjee - Simon Rudland’s partner in Gold Leaf Tobacco Corporation - and his family were among the "inter-related parties" with Magister. – Fin24
The company is struggling under a R6.8-billion debt burden, and hoped that a rights issue of up to R5 billion would provide a reprieve.
Mauritius-based company Magister Investments – which has close ties to the Zimbabwean Rudland family, which owns the controversial cigarette group Gold Leaf Tobacco Corporation - has committed some R2 billion to underwrite the rights issue, which will see it potentially take control of the sugar and property group.
But on Thursday, the Takeover Regulation Panel (TRP) issued a ruling that put this arrangement in jeopardy.
According to law, if a company – and any party acting in concert with the company - buys more than 35% of a company, the company is forced to make an offer to all shareholders to buy them out.
CONDITIONS
One of the conditions of Magister’s takeover of Tongaat is that it wouldn’t have to make this mandatory offer.
And in January, Tongaat shareholders voted to waive their right to this mandatory buy-out offer. But a group complained that close associates of Magister have been buying Tongaat shares in the run-up to the shareholder vote, to help sway the vote.
The TRP found that these third parties and Magister were indeed in concert and nullified the waiver.
On Friday, Tongaat said in a statement that it was not involved in the third-party share acquisitions, and only became aware of them after they had occurred.
Tongaat and Magister now have five business days to apply for a hearing over the ruling. Tongaat said it was still studying the ruling, but that it remained committed to a recapitalisation.
"[Tongaat Hulett] remains firmly of the view that a capital raise is a better alternative to strategic asset disposals, particularly an accelerated disposal programme, which is unlikely to realise full value for the assets."
The investigative news outlet amaBhungane reports that Ebrahim Adamjee - Simon Rudland’s partner in Gold Leaf Tobacco Corporation - and his family were among the "inter-related parties" with Magister. – Fin24
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