South African sugar manufacturer Tongaat Hulett requests a stay of proceedings from its creditors

Caught by the throat, the group confirms that it has requested a suspension of payment from its creditors.

The descent into hell continues for the agro-industrial Tongaat Hulett. After announcing at the end of May that its financial statements for 2018 would be revised due to « worrying past[accounting] practices », the South African group requested a stay from ten of its creditors in order to recover from the impact of the restatement of its accounts*. The information was confirmed by the CEO himself, Gavin Hudson, quoted this Tuesday by the financial agency Bloomberg. The main task of the new manager, who took office in February, is to save a company on the verge of bankruptcy – the result of poor management for many years – whose cumulative debt now stands at 11 billion rand ($790 million).
« Tongaat won’t be fixed overnight, but we’re looking at all options, » said the CEO, who also recalled that his company « is selling assets and reducing costs to strengthen its balance sheet. The production units in Botswana, Mozambique, Zimbabwe and Namibia are expected to bear the primary costs of this restructuring. In addition, the company has announced a reduction of 600 positions in South Africa. Tongaat Hulett, mainly active in the sugar industry, is currently paying nearly one billion rand (72 million dollars) a year in debt service and is seeking, with this request for a stay, to freeze these bills from the end of July. It remains to be seen how the company’s creditors will react to this request. None of them have, for the time being, communicated on the subject. In the meantime, the group will maintain the suspension of its listing on the Johannesburg Stock Exchange, effective since early June.

*At the end of May, Tongaat Hulett’s management indicated that it may have to reduce its 2018 balance sheet equity by 4.5 billion rand (USD 300 million).