Tongaat Hulett Limited (THL) announced the implementation of its approved business rescue plan. This move involves an equity subscription through a specific issue of shares. The plan, approved by shareholders on January 12, 2024, aims to recapitalize the company’s balance sheet.
Background
THL has been under financial distress, prompting the need for a business rescue plan. The company’s shares have been suspended from trading on the JSE since July 2022. The approved plan focuses on acquiring lender group claims and using a portion of these claims for new ordinary shares.
Key Features of the Plan
The equity subscription plan includes several critical components:
- Continued Trading: THL aims to continue trading substantially as it did before the business rescue commencement date.
- Balance Sheet Recapitalization: The plan involves using lender group claims to subscribe for equity, strengthening the company’s financial position.
- Possible Continued Listing on JSE: While Vision Investments will hold the majority of shares, the plan aims to keep THL listed on the JSE. However, delisting remains a possibility.
Equity Subscription Details
Vision Investments 155 Proprietary Limited will subscribe for new ordinary shares in THL. This subscription will involve exchanging a portion of lender group claims for newly issued shares. Vision Investments will own 97.3% of THL’s total issued share capital after this transaction.
Equity Claim Value
The value of the equity claim, as of the signature date, stands at R4.89 billion. This claim will be extinguished in exchange for 4.86 billion new shares in THL. The deemed share price is calculated at 101 cents per share. However, this price does not reflect the fair value but is derived from the debt extinguishment requirement.
Table: Key Financial Figures
| Financial Metric | Value |
|---|---|
| Equity Claim Value | R4,893,037,813.26 |
| Number of New Shares Issued | 4,864,887,494 |
| Deemed Share Price | 101 cents per share |
Shareholder Impact
Existing shareholders will become minority shareholders, with Vision Investments holding the majority. The plan requires a special resolution approval from shareholders, as the issuance of new shares exceeds 30% of THL’s current share capital.
Suspensive Conditions
The equity subscription is subject to several conditions, including:
- Approval of all required resolutions.
- Execution of escrow arrangements agreements.
- Consent from competition authorities.
- Possible waiver of the mandatory offer requirement by shareholders.
- Exemption from the mandatory offer obligation by the Takeover Regulation Panel.
- Consent from the Financial Surveillance Department of the South African Reserve Bank.
Conclusion
The equity subscription plan is a crucial step in THL’s efforts to restore solvency and continue operations. Shareholders and stakeholders will be closely monitoring the implementation of this plan and its impact on THL’s future.
