Tongaat Hullett group mulls selling off iconic HQ

Tongaat Hulett is considering disposal of further non-core assets and an equity raise as part of the restructuring plan, which includes some tough decisions such as the possible sale of its sprawling Amanzimnyama Hill head office property in Tongaat, north of Durban.
This comes as the company’s hares resumed as trading on the Johannesburg Stock Exchange (JSE) on Monday morning following its almost seven-month suspension in the wake of accounting irregularities that saw billions wiped off its equity and share price last year.
The beleaguered agri-processing and property group, which faces a debt burden of almost R13 billion and debt financing cost of some R600 million currently, is aiming to make significant headway in its turnaround plan this year.
The group has used the landmark property as its HQ for almost four decades.
It was once the family homestead of the well-known Saunders sugar barons, who were part of the Tongaat Sugar consortium that led a hostile takeover of Hulett Sugar Corporation in the 1960s.
Tongaat Hulett CEO Gavin Hudson confirmed last Friday that the group is considering selling this heritage property to help bring down its debt.
Hudson, who is part of the new executive team that over the past year has unravelled accounting wrongdoings by the group’s previous leadership, was speaking to Moneyweb after the release of the group’s results for the half-year to September 30, 2019.
“Nothing is off the table,” he said.
“If there is fair value, we will consider all options. We have a commitment to pay down debt, in fact not just a commitment, but a need to pay down debt considering our finance charges.
“We are looking at various options to bring down Tongaat’s debt. This includes the sale of non-core and certain other assets such as Amanzimnyama, but also an equity raise.”
Moneyweb understands that several property companies and KwaZulu-Natal magnates have made offers for the Amanzimnyama property, but are not keen on Tongaat’s asking price of around R200 million.
Hudson would not go into detail on land disposals under consideration or the land sales that have been concluded in the half-year period. He did, however, say that land sales in a tough property market was a positive and would see some 141 000m2 of new development.
On the planned equity raise, Hudson said he hoped it could be finalised by the first quarter of this year. Tongaat is hoping to raise as much as R4 billion in new equity on the JSE.
“We have already begun talking to stakeholders about an equity raise, and the lifting of the suspension of trade in our shares on the JSE is part of the process,” he said.
As part of the restructuring plan, the group is aiming to bring down its debt by some R8.1 billion by next year. It has already embarked on cost-cutting to the tune of more than R1 billion, which included significant retrenchments last year.
Tongaat Hulett asked the JSE to suspend trade in its shares in June last year after the stock plunged as more details of the accounting irregularities came to light.
Some 75 percent of the value of its market cap had been wiped the boards in 2019 with its shares last trading at R13.21. — Moneyweb