By FARAI MABEZA in Harare
TONGAAT Hulett says its Zimbabwe operations will not be affected by developments at Tongaat Hulett South Africa which have seen the latter going into voluntary business rescue.
The business rescue proceedings will cover two operations in South Africa, Tongaat Hulett Limited and Tongaat Hulett Development Proprietary Limited.
The decision comes after what the company termed significant challenges following years of high and increasing debt levels, alleged financial misstatements and historic mismanagement under the previous leadership.
The Zimbabwe operations cover Hippo Valley and Triangle sugar estates who provide the bulk of the group’s sugar output. The two, according to Tongaat, are not financially distressed and therefore will continue trading as before.
Also unaffected by the developments are Tongaat Hulett’s Botswana and Mozambique businesses.
“The international operations of Tongaat Hulett in Zimbabwe (as well as in Botswana and Mozambique) are funded independently from the South African operations and are not entering business rescue, continuing to trade in the ordinary course,” Tongaat head for industry and corporate affairs Dahlia Garwe said in a statement yesterday.
“The action in the South African business is a result of it remaining unable to service its residual debt, the majority of which (around 87 percent) is carried by the cash flows of the South African sugar operation, the property business and operational support fees received from the non-South African sugar operations,” Garwe said.
Business rescue provides a financially distressed company with a moratorium during which the rights of claimants against the company are suspended.
The intention of business rescue is to consider various options, in consultation with all relevant stakeholders, with a view to develop a plan which could, given time, be implemented and result in the successful rescue of the company.
“As a new leadership team, we have worked extremely hard since 2019 on a comprehensive turnaround strategy.
“Good progress was made on several fronts, with debt decreasing by R6.6 billion from a high of R11,7 billion, through the selected sale of core and non-core assets,” Tongaat chief executive Gavin Hudson said in another note to stakeholders yesterday.
“Despite the good progress, we currently have a shortfall in the company’s working capital facilities of approximately R1,5 billion, which is required to fund the peak working capital requirements to complete the 2023 financial year.
“Our banking funders have unfortunately informed us that they are not prepared to provide the additional funding.”
Thus the company resolved to commence with voluntary business rescue proceedings. – Daily News