Tongaat Hulett’s share price has surged more than 80 percent since the sugar and property group announced late last month that a rights issue underwriting deal with controversial financier, the Mauritius-based Magister, had been terminated.
Yesterday, the share price was up a substantial 20.9 percent to R4.90, following an announcement by Tongaat that Artemis Investments, a shareholder that has been among some very vocal other minority shareholders in their opposition to Tongaat’s plans for a R5 billion rights issue, had acquired shares in Tongaat to now equal 10 percent of the share capital.
Artemis is understood to be headed by KwaZulu-Natal-focused property developer Charles Liasides. His company, Artemis Properties, owns a portfolio of retail centres in the province including Windermere Centre, Empangeni Mall and Fields Hill Shopping Centre.
Before he founded Artemis, he had spent some 20 years in the construction industry, many of these as a director of Group 5.
Liasides could not be reached for further comment yesterday,
Tongaat is struggling following years of irregularities that has left it with a R6.8bn pile of debt and former directors, including ex-CEO Peter Staude, facing fraud charges.
The group announced last month that it had established a restructuring committee to oversee and approve negotiations and development of a plan to reduce debt to sustainable levels, and to improve the liquidity of the group.
Piers Marsden was appointed as chief restructuring officer and chairperson of the committee, while its other members include non-executive directors Jean Nel, Andile Sangqu, Graham Clark and chief financial officer Rob Aitken.
Opportune Investments chief investment officer Chris Logan said Tongaat should have a “call” for investors considering the sharp rise in the share price, and the fact that the annual results were delayed, so that investors could know how the group was progressing.
He said the fact that the “highly dilutive” rights issue had been avoided was undoubtedly a factor behind the rally in the share price. He said however that now that the rights issue had been terminated, some asset sale at the group was likely.
There has been speculation that Tongaat could make good progress in reducing its debt by taking into account an expected payment by Deloitte for its role as the group’s auditor during the years of fraud at the group.
In addition, there has been speculation that one of the sugar operations in one of the three main geographic regions that the group operates in - South Africa, Zimbabwe or Mozambique - could possibly be sold.
This was because these were three distinct sugar-growing businesses, operating with, for instance, different regulatory structures.
Mozambican news sources had indicated that US-based Lusitania Investment Capital had been in “negotiations” with Tongaat about a $220 million (about R3.2bn) offer for the Mozambique sugar assets.
Tongaat, however, said that while it had received overtures for some of its assets from parties that it did not name, it had rejected those as a sell-off of assets was not being contemplated by the group at the time.
BUSINESS REPORT