Sugar producer Tongaat Hulett’s restructuring has gained momentum, following the reduction of its debt but its R2 billion rights issue is still on the cards.
On Thursday, Tongaat released its interim results for the six months ended 30 September 2021. The results showed that its debt was down to R6.9 billion from R11.7 billion on 30 September 2020, meaning it had reduced its debt by 41%.
The group’s finance costs were down by 50% due in part, to the debt reduction, while its revenue rose by 5% to R8.5 billion, and its operating profit fell by 23% to R1.3 billion. Profit before tax increased by 23% to R677 million.
The sugar maker is working on recovering from a financial scandal, following a 2019 finding that it had inflated its financials by almost R12 billion over a seven-year period.
In addition to its debt woes, Tongaat had to contend with the impact of Covid-19, the July unrest in KwaZulu-Natal, unfavourable weather conditions and hyperinflation in Zimbabwe.
The sugar producer said the unrest resulted in a loss of business of about R158 million, due to lost production capacity and cane arson fires.
“In addition, R38 million was lost through the looting of sugar in a third-party warehouse. The third-party has been invoiced for the recovery thereof, with R12 million having been received in November 2021,” said the company in its results statement.
Last month, Tongaat announced a R4 billion rights issue, with R2 billion underwritten by Mauritius-based Magister Investments.
“It is time for a new chapter for Tongaat Hulett. We believe that through a rights offer of up to R4 billion, Tongaat will unlock long-term growth, protect intrinsic shareholder value and create a legacy for the many people dependent on the Tongaat business across SADC (South African Development Community),” said Tongaat CEO Gavin Hudson.