Sugar, ethanol, animal feeds and cattle company Tongaat Hulett reports that the Takeover Regulation Panel (TRP) has completed its investigation, concluding that the third parties and Magister Investments are concert parties, and accordingly that the shareholder waiver has been nullified as a consequence of the third-party share acquisitions.

In November 2021, Magister approached Tongaat, expressing an interest in making an equity investment in the company.

However, following a ruling by the Takeover Special Committee (TSC), the TRP undertook an investigation in relation to one of the complaints raised by the Artemis consortium with the TSC.

At the time, Artemis claimed that the waiver by Tongaat shareholders, at a general meeting held on January 18, of their potential future right to a mandatory offer following the Magister transaction was a nullity under the provisions of Regulation 86(5) of the Companies Regulations by reason of certain third-party share acquisitions undertaken independently of Tongaat.

As a result, the TRP issued a ruling withdrawing its January ruling which exempted Magister from a potential future obligation to make a mandatory offer to Tongaat shareholders following the Magister transaction.

Tongaat notes that no adverse finding was made against it and that Tongaat was not directly or indirectly involved in the third-party share acquisitions, and only became aware of them after they had occurred. Tongaat also points out that no allegation or finding to the contrary has been made by Artemis, the TSC or TRP.

Further, Tongaat highlights that an obligation under the Companies Act to make a mandatory offer only comes into being when a person or persons are able to exercise 35% or more of the votes attaching to issued shares.

Accordingly, Tongaat says, the TRP ruling does not in and of itself trigger an obligation to make a mandatory offer.

Going forward, Tongaat is considering the TRP ruling and will advise its shareholders in due course of its intended course of action.

Tongaat says it remains committed to a recapitalisation, proactively engaging with stakeholders regarding a capital raise transaction and a sustainable solution for the Tongaat group.

The company says it remains firmly of the view that a capital raise is a better alternative to strategic asset disposals, particularly an accelerated disposal programme, which is unlikely to realise full value for the assets.