Agroprocessing company Tongaat Hulett says its board of directors has approved the capital restructuring plan created by the chief restructuring officer (CRO) and restructuring committee.

The plan, which is aimed at reducing the company's excess debt to sustainable levels and ensuring the sustainability of the group, will soon be submitted to stakeholders for their consideration.

The group in 2019 embarked on a comprehensive turnaround strategy, guided by a new management team and new board of directors, with a focus on financial controls, oversight, asset care and protection and our people and the communities they support.

Over the past four years, Tongaat's debt has reduced by more than R6-billion from a high of R11.7-billion through the selected sale of assets and various cost and liquidity management actions.

"Despite this progress, delays experienced in the recapitalisation of the company, particularly the failed planned equity capital raise, have seen high debt levels remain well in excess of what can be serviced by the company.

"Consequently, further initiatives are urgently required to address the excess debt burden in the South Africa operation of more than R6.3-billion," the company states.

Tongaat in June appointed Piers Marsden as CRO and established the restructuring committee as an additional subcommittee of the board of directors to intensify the focus on the company's turnaround.

Tongaat says the restructuring plan, which was developed by Marsden, with the support of the restructuring committee, seeks to address how its excess debt can be repaid in a manner that recognises the South African lenders’ secured position, while accommodating other stakeholders’ requirements to the fullest extent possible.

"The sustainability of our businesses, employees and value change are front and centre of the plan," the company states.

"The plan also addresses the company’s liquidity constraints after a R1.5-billion shortfall in facilities necessary to cover the peak working capital requirement of the current milling season, and which arose out of the challenging commercial environment experienced towards the end of March, the lack of any meaningful dividend or fee income from the African sugar operations and higher restructuring costs.

"Despite these and other setbacks, the lenders have continued to support the company with the introduction of a new R600-million facility, which is scheduled to be repaid on October 25," Tongaat adds.

Tongaat CEO Gavin Hudson says the board and management team continue to act with speed, determination and the highest standards of governance to secure the future of the company.

"Securing funding will be key to our ability to continue operating into the next milling season and ensuring that Tongaat is able to continue to support the local sugar industry with critical milling capacity.  Over 500 000 dependants and community members across the Southern African Development Community rely on Tongaat for their livelihood. Since the new management team and board were appointed three and a half years ago, we have shared a singular focus – to fight for the future of this great company.

"Our strategy has focused on delivering a plan to make Tongaat sustainable and allowing it to maintain its socioeconomic contributions. Tongaat plays a systemic role in the food security of the region and the economy of South Africa. For every job created by Tongaat Hulett South Africa, ten jobs are supported elsewhere in the economy,” he comments.