Tongaat Hulett Limited (TON) Earnings Call Transcript & Summary

And we are live.

Thank you, [ Andre ]. May I extend to you a warm welcome to this special general meeting of shareholders of Tongaat Hulett Limited. It is certainly very challenging and interesting times we are in. And to not have a meeting in person, certainly does feel strange. We do appreciate the time that each of you took to attend the meeting as it is a very important meeting for the company as part of the journey to rebuild and restore it to a sustainable business in the interest of the South African economy and all stakeholders. Mr. Secretary, is the meeting properly constituted?

Yes, Mr. Chairman. The meeting is properly constituted.

Thank you, Johan. I think, as an introduction, it is certainly a first for Tongaat to be conducting a fully electronic shareholders meeting. And I suppose it is just one of many changes that have occurred in the wake of the COVID-19 pandemic. Here at Tongaat, we take the health and safety of our people very seriously, and I'm sure that we will all agree that the way we are conducting this meeting is in the best interest of all concerned. I would also like to extend a special welcome to all executives and employees at large and to all members of the Board present today. The journey that Tongaat as a company embarked on over the past few months was interesting, challenging but also exciting. Shareholders will appreciate that, although we have not announced financial results for 2020 and currently in a closed period, we can safely say that we have made significant progress in relation to the turnaround strategy we have embarked upon and of which we have shared detail extensively and also in the media. It is important to highlight that we have met our commitments to our lenders to date. Also, we are a business today with improved cash flow and options available should extreme events, as we are currently experiencing with a 1 in 100-year event like COVID-19, impact some initiatives of the group. No doubt, we have a long way to go, but this is not the same business as when the new leadership team came into office. We thank our management for their commitment, and we thank our stakeholders for their understanding and continued support. The COVID-19 pandemic is having an impact on each and every one of us, impacts all businesses, and Tongaat is no exception. However, our management moved swiftly at the early signs of the crisis and implemented measures to, where possible, mitigate and limit the impact of the pandemic. We are acutely aware of the rapid rate of infections increasing and a possible second spike in infections, and can never rest on our laurels as we need to deal with the crisis that changes by the day. In this regard, it is important to state at this meeting that the potential buyer of our starch business, the KLL Group in the Barloworld stable, has raised what they deem the likelihood that a MAC event occurred. As you would have seen from SENS announcement yesterday, the parties to this transaction have differing views and a process will be followed to assess the facts in this matter. The Tongaat starch business remains an asset that performs well. In our deliberations with our funders, which takes place regularly, we do also discuss the current events and possible outcomes. This meeting today is important because, while due process is followed on the dispute, we need to be ready for any eventuality. And we thank shareholders for their support in this regard and the process leading up to this meeting. I'm going to pause for a while to see whether there might be any questions at this stage. If there are no questions, I will continue with the agenda of the day. The purpose of this meeting, shareholders are referred to the Firm Intention Announcement, wherein the company advised shareholders that it has entered into an agreement to dispose of Tongaat's starch business as a going concern to the KLL Group, a wholly owned subsidiary of Barloworld. The purpose of this meeting is to consider the resolutions necessary to obtain shareholder approval for the proposed sale of the company's starch business as outlined in the circular to shareholders dated 8 May 2020. The disposal constitute a category 1 transaction as contemplated in section 9 of the JSE Listing Requirements. As a result, THL shareholder approval of ordinary resolution #1 is required for THL to implement the disposal. In addition, the disposal is regarded as a disposal of the greater part of the assets or undertaking of THL in terms of section 112 of the Companies Act. Accordingly, THL shareholder approval of special resolution #1 is required for THL to implement the disposal. Subject to obtaining THL shareholder approvals and all other Suspensive Conditions being fulfilled or waived, the disposal is expected to be implemented by Wednesday, 30 September 2020. The notice convening the meeting is contained in the circular, and I will take the notice as read. Ladies and gentlemen, as this is a first for all of us, in accordance with good corporate governance practice, the voting on all resolutions at this general meeting will be conducted by poll. This is to ensure that the respective shareholders as well as shareholdings of shareholders are fairly and accurately reflected in the voting. Shareholders or their proxies or representatives present would have registered on the electronic platform to be able to vote on the resolutions. After taking questions on the matters being voted on in this meeting, the resolutions will be opened for voting. Each shareholder or its proxy or representative will then be able to cast its vote for each of the resolutions on the electronic platform. I will announce the results of the voting immediately after the voting is closed and the results have been determined. I think, at this point, I will pause and give an opportunity for questions on matters being voted on in this meeting, and your questions can be submitted electronically. I'm going to allow a few minutes for that. If there are no questions, Mr. Secretary, are the quorum requirements for the consideration of the resolutions met?

Yes, Mr. Chairman.

I confirm that the electronic system is now open for voting. Please cast your votes. You can do so while I am proposing the resolutions. Alternatively, you can vote during the period I will afford you after all resolutions have been proposed. I will advise when the voting closes. I now propose the following special and ordinary resolutions as set out in the notice convening this meeting. I now propose special resolution #1. The company be and is hereby authorized to enter into and implement the disposal and accordingly, that the disposal be and is hereby approved pursuant to and in terms of section 112 and 115 of the Company's Act. Please, can I have a seconder for the proposal of special resolution #1.

I second the resolution proposed, Mr. Chairman.

Thank you, Ms. Jean-Louis. I now propose ordinary resolution #1. The company be and is hereby authorized to enter into and implement the disposal and accordingly, that the disposal be and is hereby approved pursuant to and in terms of section 9.2 of the JSE Listing Requirements as a category 1 transaction. Please, can I have a seconder for the proposal of ordinary resolution #1.

I second the resolution proposed, Mr. Chairman.

Thanks, Michelle. I now propose special resolution #2. Given the length of this resolution, may I take this resolution as read?

Yes, Mr. Chairman.