A consortium of shareholders hoping to block Tongaat’s bid to undertake an up to R4bn rights issue have fired their first salvo.
The JSE-listed sugar producer confirmed on Friday evening that a consortium, including Artemis Investments, had requested a review of a waiver ruling granted by the Takeover Regulation Panel to it that would allow Mauritius-domiciled Magister to take up to a 60% interest in the company without having to make a mandatory offer.
Chris Logan, a long-time analyst of Tongaat who sold his shares in the group at R90 per share in 2018, said he viewed the proposed deal on the table “extremely negatively”, and welcomed the move by Artemis and other consortium shareholders.
He said this was because of “inter alia, the proposed 33-fold increase in Tongaat’s authorised share capital and the proposed waiver to make a mandatory offer without a fair and reasonable (opinion) as mandated by law”.
Logan recently bought about 5,000 shares at R5.72 so he could participate in the general meeting at which the resolutions enabling the rights issue were passed.
Logan said Artemis was one of the bigger minority shareholders in Tongaat and that the request for a review puts the “proposals on hold” and if the “appeal succeeds all the Magister proposals become null and void as the waiver is a condition precedent”.
“If they succeed in their appeal, everything falls flat, which would be a great thing,” he said.
He said Tongaat had other “options to financial wellbeing, which they have been extremely lethargic in pursuing”.
Logan said a key issue is that the circular Tongaat sent ahead of the general meeting to vote on the resolutions to enable the rights issue and the waiver “failed to put shareholders in a proper position to make an informed vote and did not appear to comply with the law”.
He said in the case of a waiver, a “fair and reasonable assessment” by an independent party “is compulsory under section 86(7) of the Companies Act regulations. One needs to remember the rights issue circular is still to come and at this stage it's just a contemplated circular."
Logan added: "Tongaat is the only company I know to seek a waiver and not provide a fair and reasonable assessment.”
According to a report by Reuters, Artemis is a top four shareholder with a stake of 8.33%.
Tongaat said in its SENS statement released on Friday at 5.40pm that when it announced that the waiver was granted by the Takeover Regulation Panel earlier this week, shareholders were “advised that they may request the Takeover Special Committee to review the TRP waiver ruling” and that this would have to be made in writing no later than Monday January 31.
It said it had been advised by the Takeover Regulation Panel that the committee had received a notice from the consortium, including Artemis, of an intention to seek a review and that they had requested a hearing before it.
Tongaat said it and its legal counsel “can only make a considered assessment once the consortium provides” it with “full details on the grounds for the review”.
It said it was “engaging” with the Takeover Regulation Panel and would update shareholders “once it was in a position to do so”.
Contacted for further comment, Tongaat said it “cannot comment on the process around the review of the mandatory offer waiver”.
This follows a general meeting on Tuesday January 18 at which about 80% of shareholders voted in favour of the resolutions enabling a rights issue of up to R4bn. It is being underwritten by a company called Magister, which has links to Zimbabwe’s Rudland family, and has concerned some minority investors who say it will cause major dilution for existing shareholders who do not follow their rights.
Though Magister could potentially own an interest of up to 60% in Tongaat it may also end up with a smaller stake, because Tongaat maintains other investors are entitled to exercise their rights.
Tongaat said last week the Magister underwrite acts as a “significant derisking mechanism” and that it was unlikely Tongaat could have launched a rights offer of this magnitude without an underwriter.
Attempts to contact Artemis for comment were not immediately successful.
TimesLIVE
First salvo fired over Tongaat's bid for R4bn rights issue
Image: Lightbox
A consortium of shareholders hoping to block Tongaat’s bid to undertake an up to R4bn rights issue have fired their first salvo.
The JSE-listed sugar producer confirmed on Friday evening that a consortium, including Artemis Investments, had requested a review of a waiver ruling granted by the Takeover Regulation Panel to it that would allow Mauritius-domiciled Magister to take up to a 60% interest in the company without having to make a mandatory offer.
Chris Logan, a long-time analyst of Tongaat who sold his shares in the group at R90 per share in 2018, said he viewed the proposed deal on the table “extremely negatively”, and welcomed the move by Artemis and other consortium shareholders.
He said this was because of “inter alia, the proposed 33-fold increase in Tongaat’s authorised share capital and the proposed waiver to make a mandatory offer without a fair and reasonable (opinion) as mandated by law”.
Logan recently bought about 5,000 shares at R5.72 so he could participate in the general meeting at which the resolutions enabling the rights issue were passed.
Logan said Artemis was one of the bigger minority shareholders in Tongaat and that the request for a review puts the “proposals on hold” and if the “appeal succeeds all the Magister proposals become null and void as the waiver is a condition precedent”.
“If they succeed in their appeal, everything falls flat, which would be a great thing,” he said.
He said Tongaat had other “options to financial wellbeing, which they have been extremely lethargic in pursuing”.
Logan said a key issue is that the circular Tongaat sent ahead of the general meeting to vote on the resolutions to enable the rights issue and the waiver “failed to put shareholders in a proper position to make an informed vote and did not appear to comply with the law”.
He said in the case of a waiver, a “fair and reasonable assessment” by an independent party “is compulsory under section 86(7) of the Companies Act regulations. One needs to remember the rights issue circular is still to come and at this stage it's just a contemplated circular."
Logan added: "Tongaat is the only company I know to seek a waiver and not provide a fair and reasonable assessment.”
According to a report by Reuters, Artemis is a top four shareholder with a stake of 8.33%.
Tongaat said in its SENS statement released on Friday at 5.40pm that when it announced that the waiver was granted by the Takeover Regulation Panel earlier this week, shareholders were “advised that they may request the Takeover Special Committee to review the TRP waiver ruling” and that this would have to be made in writing no later than Monday January 31.
It said it had been advised by the Takeover Regulation Panel that the committee had received a notice from the consortium, including Artemis, of an intention to seek a review and that they had requested a hearing before it.
Tongaat said it and its legal counsel “can only make a considered assessment once the consortium provides” it with “full details on the grounds for the review”.
It said it was “engaging” with the Takeover Regulation Panel and would update shareholders “once it was in a position to do so”.
Contacted for further comment, Tongaat said it “cannot comment on the process around the review of the mandatory offer waiver”.
This follows a general meeting on Tuesday January 18 at which about 80% of shareholders voted in favour of the resolutions enabling a rights issue of up to R4bn. It is being underwritten by a company called Magister, which has links to Zimbabwe’s Rudland family, and has concerned some minority investors who say it will cause major dilution for existing shareholders who do not follow their rights.
Though Magister could potentially own an interest of up to 60% in Tongaat it may also end up with a smaller stake, because Tongaat maintains other investors are entitled to exercise their rights.
Tongaat said last week the Magister underwrite acts as a “significant derisking mechanism” and that it was unlikely Tongaat could have launched a rights offer of this magnitude without an underwriter.
Attempts to contact Artemis for comment were not immediately successful.
TimesLIVE
READ MORE:
Cricket SA’s harassment of Boucher and Smith is a political hatchet job
Tongaat sees sweeter future without heavy yoke of debt
Green light for Tongaat to pursue rights issue and slash debt
Tongaat Hulett wants to claw back R450m from former directors
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most read
Latest Videos