Tongaat asks shareholders for R4bn
Proceeds from the mooted rights offer will be used to pay off the sugar producer’s debt
Embattled sugar producer Tongaat Hulett is seeking a R4bn cash injection from shareholders as it desperately seeks to reduce a mountain of debt that is equivalent to just more than three-quarters of its asset base.
The debt is a burden on the company; of the R1.3bn net cash generated from operating activities for the latest full year, R1.1bn was used for servicing debt. At current debt levels, for every R1 generated from operating cash flow, 80c goes to finance costs.