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Signing of Legal Agreements for Debt Refinancing
Tongaat Hulett Limited
(Registration number 1892/000610/06)
Share code: TON
ISIN ZAE000096541
("Tongaat Hulett" or "the Group" or “the Company”)
SIGNING OF LEGAL AGREEMENTS FOR DEBT REFINANCING
Shareholders are referred to the announcement published on SENS on 25 June 2021 and the Annual
Financial Statements for the year ended 31 March 2021 in relation to the ongoing negotiations of the
refinancing of debt.
The Company is pleased to announce the completion of the refinancing of its existing South African
debt facilities (the “Debt Refinance”), including its remaining term debt, working capital facilities, a
revolving credit facility and overdraft facilities (the “Senior Debt Facilities”). With the support of the
South African lenders the maturity of the existing Senior Debt Facilities was extended to cater for
the completion of the Debt Refinance, the terms of which have been revised from those agreed in a
term sheet on 12 June 2021, due to the impact on liquidity from operational challenges and the social
unrest in KwaZulu Natal. Legal agreements with South African Lenders were signed on 3 December
2021 and were subject to conditions precedent that were fulfilled on 06 December 2021, giving effect
to the Debt Refinance.
A primary principle underpinning the Debt Refinance was to negotiate a sustainable core debt
solution based on the Company’s capacity to service the debt from forecast operational cash flows,
with longer dated facilities to create stability for the Company. The remaining balance of the debt
that cannot be serviced from internally generated cash flows is allocated to two separate term loan
instruments (comprising Senior Facility C and Senior Facility D (see description below)). The Debt
Refinance terms afford the Company the opportunity to settle this remaining balance of the debt
through strategic initiatives comprising an equity capital raise and property disposals over a period.
The refinanced Senior Debt Facilities (the “Refinanced Debt Facilities”) are governed by a
Common Terms Agreement (the “CTA”) concluded between the Company, certain of its subsidiaries
(as guarantors) and the various South African lenders such that, other than in relation to overdraft
and ancillary type facilities, each individual lender participating in one of the Refinanced Debt
Facilities participates on the same commercial terms as the other lenders participating in that facility
and has the same rights and obligations as it pertains to each of the Refinanced Debt Facilities. The
CTA makes provision for three new term loan facilities, as well as a revolving credit facility, overdraft
facilities and ancillary facilities as described further below. The underlying exposures of each
individual lender to these facilities is managed by an appointed facility agent and would be governed
by an intercreditor agreement between lenders.
The following facilities (the high-level commercial terms of which are indicated below in each case)
form part of the Debt Refinance (together with various ancillary facilities):
Facility Amount and Final maturity Pricing and any applicable Other key
purpose to which date margin adjustments commercial
to be applied features
Senior Facility R1, 050,000,000. 30 June 2024 JIBAR corresponding to Interest
A: To discharge relevant interest period (of 1 serviced from
existing financial month or 3 months) plus a internally
indebtedness margin of 5.05% before any generated cash
Margin Step Up Event or a flows.
margin of 6.17% applied
retrospectively from
refinance date following any
Margin Step Up Event.
If an event of default is
continuing a margin step up
of 2% applies.
Senior Facility R1,400,000,000. 30 June 2024 JIBAR corresponding to Revolving in
B To discharge relevant interest period (of 1 nature with
existing financial month or 3 months) plus a redraws
indebtedness and margin of 5.33% before any allowed up to
for general Margin Step Up Event or a the facility limit.
corporate and margin of 7.06% applied
working capital retrospectively from Interest
purposes refinance date following any serviced from
Margin Step Up Event. internally
generated cash
If an event of default is flows.
continuing a margin step up
of 2% applies. Commitment
fee of 1.74% on
the unused and
uncancelled
portion of the
facility
Senior Facility R2,000,000,000. 30 June 2024 JIBAR corresponding to The facility is
C To discharge relevant interest period (of 1 expected to be
existing financial month or 3 months) plus a repaid from
indebtedness margin of 5.97% before any equity capital
Margin Step Up Event or a raise proceeds
margin of 11.35% applied and/or
retrospectively from the date proceeds
on which any relevant received on
milestone regarding the disposals of
equity capital raise is not assets.
achieved but only following
any Margin Step Up Event. Interest is
capitalised.
If an event of default is
continuing a margin step up Interest
of 2% applies. remaining
unpaid at the
end of the tenor
may, at the
election of the
Company but
subject to
consent of
lenders, be
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settled by the
issuance of
shares in the
Company.
Senior Facility R1,591,880,315.68. 30 June 2024 JIBAR corresponding to The facility will
D To discharge relevant interest period (of 1 be primarily
existing financial month or 3 months) plus a repaid from
indebtedness margin of 6.69% before any proceeds on
Margin Step Up Event or a disposal of
margin of 11.06% applied longer-term
retrospectively from the date strategic
on which any relevant landholdings or
milestone regarding the out of equity
equity capital raise is not capital raise
achieved but only following proceeds to the
any Margin Step Up Event. extent Facility
C has been
In addition to the margin settled.
ratchet provisions following a
Margin Step Up Event as Interest is
described above, a margin capitalised.
increase of 2% applies if the
Company fails to reach Interest
agreement with the lenders remaining
on the form and content of a unpaid at the
plan for disposal of end of the tenor
properties (with a view to may, at the
repaying Senior Facility D) election of the
by 30 April 2022 (or such Company but
later date as the lenders may subject to
agree to). In this regard the consent of
Company undertakes no lenders, be
later than 31 March 2022 (or settled by the
such later date as the facility issuance of
agent may agree), to deliver shares in the
to the facility agent a Company.
proposal detailing the
proposed sale of certain
properties.
If an event of default is
continuing a margin step up
of 2% applies.
Senior R300,000,000 30 June 2024 Prime rate plus 2% per
Overdraft (subject to a annum initially but thereafter Interest
Facility seasonal increase from the first business day of serviced from
of the facility limit to each month the equivalent internally
R500,000,000 interest rate under Senior generated cash
between 1 Facility B. flows.
December and 31
March each If an event of default is
financial year). To continuing a margin step up Commitment
discharge existing of 2% applies. fee of 1.74% on
financial the unused and
indebtedness and uncancelled
for general amount of the
corporate and facility.
working capital
purposes.
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Apart from Senior Facility C and Senior Facility D, where interest cannot be supported by internally
generated cash flows and is capitalised, interest on the above facilities will be paid in accordance
with the selected interest period for each loan from internally generated cash flows derived from the
South African sugar operation, the property business, and dividends, management and operational
support recoveries received from operations in the rest of Africa.
A Margin Step Up Event applies in respect of Senior Facility A, Senior Facility B, Senior Facility C
and Senior Facility D where by 14 April 2022 an equity capital raise for a minimum of R2,000,000,000
or such higher amount as may be required to discharge Senior Facility C plus all accrued but unpaid
interest thereunder has not been implemented and the proceeds thereof applied in repayment of
Senior Facility C.
To the extent that equity capital raise proceeds are insufficient to repay the amount outstanding
under Senior Facility C, or an equity capital raise is not pursued for whatever reason, the Company
will need to progress the disposal (or part disposal) of other assets. An equity capital raise allows
the Company to reduce unsustainable levels of debt while minimising the extent of asset disposals
and keeping the current business largely intact.
The CTA includes the following financial covenants: historic debt service cover ratio, historic interest
service cover ratio, historic leverage ratio, loan to value (LTV) ratio, forecast debt service cover ratio,
forecast interest cover ratio and forecast leverage ratio. The financial covenants are measured on
31 March and 30 September of each year provided that in certain circumstances, where the equity
capital raise is not completed the financial covenants will be measured on a quarterly basis.
The LTV ratio requires that the amounts outstanding under Senior Facility D do not exceed 25% of
the market value of the land portfolio.
Breaches of historical ratios and the LTV ratio is an Event of Default except for such a breach
occurring on the first measurement date ending 31 March 2022.
If a forecast (forward looking ratio) is breached its triggers a requirement to discuss the failure to
meet the covenant and agree remedial actions.
Security in place for the debt facilities first in ranking includes:
• Mortgage bonds registered over immovable properties owned by the Company and its South
African subsidiaries, excluding certain properties where commercial negotiations had been
concluded or were at an advanced stage prior to the refinancing.
• General notarial bonds over movable assets of the Company’s South African businesses.
• Cession and pledge over all shares, claims, insurances, intellectual property, bank accounts and
investments of the Company’s South African businesses.
Notice in terms of section 45(5) of the Companies Act No. 71 of 2008 ("Companies Act")
Notice is hereby given in terms of section 45(5) of the Companies Act that the respective boards of
the obligors (being the Company, Voermol Feeds Proprietary Limited, Tongaat Hulett Sugar South
Africa Limited, Tongaat Hulett Developments Proprietary Limited and Tongaat Hulett Estates
Proprietary Limited) have resolved to provide financial assistance on the basis set out earlier in this
announcement. The resolution of the board of directors of the Company (Board) was passed
pursuant to the authority granted to the Board by the shareholders at the annual general meeting of
the Company held on 10 September 2021.
This notification is required because the financial assistance exceeds one-tenth of 1% of the
Company's net worth.
In accordance with section 45 of the Companies Act, the Board, having considered all reasonably
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foreseeable financial circumstances of the Company and a fair valuation of its assets and liabilities,
is satisfied (i) that immediately after providing the financial assistance, the Company would satisfy
the solvency and liquidity test as defined in the Companies Act and (ii) that the terms of the financial
assistance are fair and reasonable to the Company.
Tongaat
7 December 2021
Sponsor
PSG Capital
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Date: 07-12-2021 08:12:00
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