Tongaat Hulett is in talks with lenders in a bid to secure a standstill agreement for its debts. Picture: WALDO SWIEGERS
Tongaat Hulett is in talks with lenders in a bid to secure a standstill agreement for its debts. Picture: WALDO SWIEGERS

Embattled sugar producer Tongaat Hulett says it is working towards a standstill agreement with lenders as it seeks to stabilise the business and ensure its sustainability.

The company, “other obligers” and its lenders planned to reach an agreement “which will regulate, amongst other things, a moratorium for the repayment of amounts, other than interest, due and payable” under its facilities.

The lenders were willing to reach a standstill agreement “subject to terms and conditions to be agreed and necessary approvals being obtained”, Tongaat said.

The group said it had concluded a waiver and undertaking agreement with its debt providers relating to its SA debts.

The lenders had agreed to waive their rights arising from any breach of Tongaat’s financial covenants.

In April, Tongaat told shareholders it was likely to have to restate previously released financial information, sending its shares crashing.

On Tuesday, Tongaat said Rand Merchant Bank (RMB) and Nedbank would acquire significant stakes in the company after it was forced to unwind its empowerment deal.

RMB and Nedbank exercised their rights in terms of the broad- based BEE (BBBEE) funding agreement to acquire 23.4-million Tongaat shares at 1c a share.

The banks essentially forced the heavily indebted transaction to be unwound.

hedleyn@businesslive.co.za