JSE lifts suspension of trade in Tongaat Hulett shares

Trade in Tongaat Hulett shares will resume on 3 February 2020.

The Johannesburg Stock Exchange (JSE) has agreed to lift the suspension of trade in Tongaat Hulett’s shares with effect from Monday, 3 February 2020 after a six-month ban.

The embattled sugar producer, which is based in South Africa, asked the JSE to suspend its shares from the main bourse in June 2019 after it uncovered accounting irregularities that resulted in inflated assets and profits.

Its shares were also suspended on the London Stock Exchange. The company asked the JSE in December to postpone lifting the suspension, saying it needed more time to analyse its numbers. On Friday, Tongaat Hulett said the JSE has agreed to lift the suspension “to enable investors to absorb the financial information that is now available” as the troubled sugar producer looks to recover from one of the biggest corporate scandals in South Africa.

The company is also considering embarking on a capital raise as it seeks to reduce its South Africa debt by R8.1 billion over the next 13 months.

The group, whose market capitalisation is only about R1.8 billion, said it is struggling to reduce its South Africa debt through earnings from that market, and needs to either accelerate disposals, raise capital or save additional cash.

Total borrowings stood at R12.99 billion at the end of the company’s half year to end-September. The company warned of difficulties in distributing earnings from Zimbabwe and Mozambique, adding that South Africa’s earnings on their own are insufficient to service debt in the time frame agreed with lenders.

The company was forced to restate its 2018 profits after the discovery of irregularities. In the restatement of the six months to September 2018, its headline loss ballooned to R392 million from its previously reported loss of R110 million. 

For the six months to end-September 2019, Tongaat Hulett’s South Africa sugar operations generated an operating loss of R283 million in the six months to end-September, more than double the previous period. The group reporting local sales remained subdued and that there had been a change in the sales mix towards lower-margin exports.

Group revenue decreased by 1.5 percent to R8.085 billion, while operating profit surged to R1.278 billion from the previous period’s R315 million. The latter was largely due to Zimbabwe, where hyperinflationary accounting has been put into effect.