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TONGAAT HULETT LIMITED - Renewal of Cautionary and Further update on Group processes

Release Date: 18/11/2019 16:43
Code(s): TON     PDF:  
 
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Renewal of Cautionary and Further update on Group processes

Tongaat Hulett Limited
(Registration number 1892/000610/06)
Share code: TON
ISIN ZAE000096541
(“Tongaat Hulett” or “the Company”)

RENEWAL OF CAUTIONARY AND FURTHER UPDATE ON GROUP PROCESSES

Renewal of cautionary
Shareholders are referred to the cautionary announcement of 8 March 2019 and the subsequent
renewals thereof, the most recent of which was released on 7 October 2019. The cautionary
announcements are still relevant and applicable. Accordingly, shareholders are advised to
continue to exercise caution.

Further update on group processes
The Board wishes to provide shareholders with the following update:

Debt restructuring
In the announcements of 24 April 2019 and 16 May 2019 Tongaat Hulett advised
shareholders that:
• the Company was engaging in a collaborative process with its debt providers to ensure the
    Company's long-term sustainability;
• Tongaat Hulett had concluded a waiver and undertaking agreement (“Waiver
    Agreement”) with its debt providers in relation to existing South African short- and long-
    term facilities ("SA Lenders");
• the Company and other South-African incorporated group companies (collectively, the
    “Obligors”) had agreed to provide security to the SA Lenders in connection with the
    Waiver Agreement, including, inter alia, mortgage bonds over the immovable properties
    owned by them and cessions over debtors and inventory; and
• the Company intended to negotiate and conclude a standstill agreement with the SA
    Lenders.

Shareholders are advised that Tongaat Hulett has now entered into a detailed term sheet with
the Lenders (“Term Sheet”) in terms of which, rather than a standstill arrangement, the SA
Lenders have agreed in principle to make new senior term loan facilities, senior revolving credit
facilities and overdraft facilities available to the Company (“New SA Facilities”). The New
SA Facilities will be used primarily to refinance amounts owing to the SA Lenders under
existing facilities and to fund general corporate and working capital requirements.

In respect of the New SA Facilities, the Obligors will be furnishing the SA Lenders with, inter
alia, security cessions and pledges over shares, securities and claims held by the Obligors in
other members of the group from time to time, and security cessions and pledges over
insurances, trade debtors, intellectual property and bank accounts, in addition to the security
referred to in the 16 May 2019 announcement.

The Term Sheet provides for timelines within which repayments must be made on the debt
owing to the SA Lenders and contemplates that the Company will fund these repayments out
of asset disposals and/or equity capital raisings. The Term Sheet has been expanded into full
draft agreements which are in the process of being negotiated. As stated above, the term sheet
is a detailed document, which should expedite the process of finalising the full agreements. A
further announcement will be made as soon as the full agreements have been signed.

The negotiations on the debt standstill in Mozambique continue to proceed positively.

Turnaround plan
Significant progress continues to be made in the implementation of the turnaround plan which
is aimed at reducing costs and re-baselining the Company’s cost basis. The various turnaround
initiatives are geared towards delivering cash flow improvements above the budget baseline
over a two-year period. With six months of execution already completed, meaningful progress
has been made, and is currently tracking within 90% of year to date target.

The group has also embarked on the disposal of certain non-core assets, with good progress
being made. A further SENS announcement in this regard will be issued. The Board remains
committed to realising the appropriate value in the sale of the remaining assets. All these
initiatives form part of the Company’s debt reduction plan.

Financial results
It is envisaged that the restated audited consolidated financial statements for the year ended
31 March 2018 and the audited consolidated financial statements for the year ended
31 March 2019 will be released in the week commencing 9 December 2019 to enable the
Company to hold its annual general meeting (“AGM”) on 24 January 2020. The Company’s
integrated annual report, incorporating the notice of AGM, will be issued at the appropriate
time.

Forensic Investigation
With reference to the forensic investigation conducted by PricewaterhouseCoopers Advisory
Services Proprietary Limited (“PwC”), the Company anticipates releasing information on
PwC’s key findings on the Company’s website on Friday 29 November 2019.

Shareholders are reminded that PwC’s forensic report is confidential and subject to legal
privilege, and accordingly the report will not be published.

Changes to the Board: Appointment of Executive Director
Issued in terms of Section 3.59 of the Listings Requirements of JSE Limited (“JSE”).

The Board is pleased to announce the appointment of Mr Dan Leseja Marokane as an Executive
Director of Tongaat Hulett with immediate effect. Mr Marokane is the Strategy & Business
Transformation Executive, and in this role, his responsibilities will include those of a Restructuring
Officer. He is also responsible for the Investment Committee, Asset Maintenance & Investor
Relations.

The Board welcomes Mr Marokane’s appointment and looks forward to his valuable
contribution on the Board.

Changes relating to Company Secretary
Issued in terms of Section 3.59 of the Listings Requirements of JSE Limited (“JSE”).
The Board hereby informs shareholders that the Company Secretary, Ms Maditshaba Mahlari
has tendered her resignation on 15 November 2019 and her last working day with the Company
is 31 January 2020, to effect a smooth handover process. The Board would like to thank Ms
Mahlari for her contribution to the Company and wishes her well in her future endeavours.

The Board has appointed Mr Johann van Rooyen as the new Company Secretary with effect
from 1 January 2020. Mr van Rooyen is an established legal professional and Admitted
Attorney with extensive risk, compliance, insurance and company secretarial experience within
the financial, insurance, and manufacturing industries. He has extensive experience in advising
and managing the effective functioning of Board and committees, governance processes and
compliance. The Board is satisfied that Mr Van Rooyen possesses the competence and
experience to fulfil the role.

Tongaat
18 November 2019

Legal advisors
Bowman Gilfillan Inc.

Sponsor
Investec Bank Limited

Date: 18/11/2019 04:43:00
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