The trade of Tongaat shares will resume on the JSE on Monday 3 February, and it’s likely that shareholders will be in for a roller-coaster ride.
The share was suspended at the request of Tongaat management in June 2019 at R13.20 after falling 65% after the company warned in March 2019 that results may need to be restated. But the share had been in freefall since January 2017 when investors, weary of Tongaat’s decade-long poor performance, began to sell out.
The JSE agreed to lift the suspension after the company released its results for the six months to September 30 2019.
A great deal of work has been done since former CEO Peter Staude retired in September 2018. He retired as allegations of financial gerrymandering at the 127-year-old company were increasing.
A new chairman, Louis von Zeuner, was appointed to the board in December 2018, new CEO Gavin Hudson in January 2019 and CFO Rob Aitken in March 2019. Finally, in November 2019, audit firm PwC, which was hired to investigate the financials, submitted a report that accused former executives of overstating accounts and assets; at the same time, the new management team developed and began to implement a full turnaround plan at Tongaat, while governance processes and controls were materially revised. By implication, the latest set of results can be trusted.
Which is not to say that investors will be piling back into the share.
Long-time Tongaat shareholder and Durban son, Chris Logan, whose first job as an articled clerk was at Tongaat, will not be buying shares in any great hurry. He sold out of the company at R90.00 and plans to stay on the sidelines for a little longer.
“This is a business with R4-billion of negative equity and R13-billion of debt on the balance sheet which means it’s effectively bankrupt,” he says.
to perpetuate the environment so that they can move on to the next “job”
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