The proposed sale of Tongaat's starch business to an entity owned by Barloworld appears to be on the line as the companies tussle over the conditions of the sale.
Statements issued by both companies on Thursday afternoon indicate that the parties hold different views about the status of the transaction, which must now be referred to an independent mediator.
Last month, Tongaat stated that Barloworld's subsidiary, KLL Group, believed the financial impact of Covid-19 on the business had effected "material adverse changes" (MAC) which may heavily impact earnings, but Tongaat was not convinced that any material adverse changes had occurred.
The latest statement by Barloworld says the companies have also been unable to agree on the appointment of one of the two parties identified in the sale purchase agreement to act as the independent accountant.
"The transaction cannot complete until such time as it has been finally determined whether or not a MAC has occurred," Barloworld said.
The company further stated that if this determination has not been made by the longstop date, which is no later than 31 October 2020, the sale purchase agreement will terminate.
Tongaat, for its part, insists that it is "committed to the process of resolving the dispute", pointing to the referral of the matter to an independent third party. However, they reiterated that the parties had, as yet, been unable to agree on who this should be.
Tongaat earlier indicated that KLL believes the earnings of the starch business for the financial year ending March 2021 would be 82.5% or less compared to the 2020 financial period, diminishing the transaction's value. Tongaat had announced in February that it would be selling its starch business to KLL for R5.35 billion, which would aid it in reducing its debt burden. It has previously said it aims to cut debt by at least R8.1 billion by September 2021.
The company is due to hold a general meeting on Friday, where shareholders will be asked to consider the the resolutions required to implement the disposal.
Tongaat shares closed at R5.92, up 0.34%.