The group said some of the lenders had shown interest in the standstill agreement but wanted to work out clear terms and conditions as well as necessary approvals before signing on it.
It said it had concluded waiver and undertaking agreements on existing South African short and long-term facilities provided by lenders to the company.
“In the waiver agreement, the lenders have, among other things, agreed to waive their rights arising from any breach of financial covenants contained in the facilities agreements for the measurement date falling on March 31, 2019,” the group said, adding that it was certain of its directly or indirectly wholly-owned subsidiaries.
Tongaat took a knock in March with shares plummeting nearly 30percent in one day after the group said it was bringing in PricewaterhouseCoopers to conduct a comprehensive review of some of its operations.
In the six months to end September 2018, Tongaat Hulett reported that its net debt had increased to R7.75billion compared to R6.51bn a year earlier, with headroom on its borrowings facilities of R1.8bn.
Tongaat Hulett shares closed 2.30percent higher at R21.39 on the JSE yesterday.
“The company, the other obligors and the lenders intend to negotiate and conclude a standstill agreement in due course which will regulate, among other things, a moratorium for the repayment of amounts, other than interest, due and payable under the facilities and other possible facilities,” the group said.
On Tuesday, Tongaat was forced to unwind its empowerment deal formed in 2007.
The company said that Rand Merchant Bank (RMB) and Nedbank exercised their rights in terms of the broad-based black economic empowerment (BBBEE) funding agreement to acquire 23.4million Tongaat shares at 1cent a share.
Ron Klipin, a senior analyst at Cratos Capital, said the standstill agreement would only be helpful in the short term. He said the company still had structural issues to contend with.
“These are valuation methodology of assets such as property and sugar cane. The global sugar prices seem to have remained in a downward trend, while land sales are weak.
“In addition, sugar tax in South Africa has impacted on sales and the health aspects, both in the country and globally.”