Tongaat Hulett to delist from JSE as business rescue process continues

Tongaat Hulett plans to remove itself from the Johannesburg Stock Exchange (JSE) on November 3, marking the end of its listed history following more than seven decades as a prominent sugar producer. The JSE announced the delisting decision on October 12, citing persistent non-compliance with listing standards and the lack of a realistic path to compliance.

The company's adoption of a business rescue plan anticipates its delisting status. Tongaat Hulett's shares were halted from trading on July 20, 2022, after failing to release its annual financial results for the fiscal year ending March 31, 2022. The company entered voluntary business rescue in October 2022, with a plan to be restructured through a debt-for-equity conversion or an asset sale to the Vision Consortium as going concerns.

Shareholders rejected the proposed equity subscription in August 2024, leaving the alternative transaction route to be pursued. However, an updated agreement between the business rescue team, the Industrial Development Corporation (IDC) and Vision introduced an additional restructuring option. The ultimate outcome remains uncertain, with possibilities including a restructuring agreement, a sale of the assets and businesses as going concerns, or a winding-up.

The delisting does not conclude the business rescue process, as shareholders will retain their shares in an unlisted company, albeit no longer tradable on the JSE or through its settlement system. No monetary compensation will be provided to shareholders upon delisting. The financial turmoil at Tongaat Hulett began with accounting irregularities uncovered during a forensic investigation, leading to charges against former executives and an external auditor in 2022.

These allegations, while not proven, underscore the company's financial distress. Despite the delisting, the business rescue proceedings persist, with the IDC extending its R2.5 billion post-commencement finance facility until November 30, 2026. This facility stipulates that outstanding debts must be repaid or restructured in a manner acceptable to the IDC before assets can be transferred as a going concern.

The delisting alone does not determine the future of Tongaat Hulett's operations. The final decision on the restructuring process significantly impacts creditors, employees, sugar cane growers, and other stakeholders connected to the company and the broader sugar industry.