JOHANNESBURG (Reuters) - South Africa’s Tongaat Hulett Ltd said on Thursday it was looking to negotiate a standstill agreement with its lenders, which had already agreed to waive some of their rights related to their loans to the troubled sugar producer.
The news supported Tongaat shares, which have been under pressure since it issued a profit warning in February, and they were up 1.7% by 1155 GMT.
The company, which has operations in South Africa, Mozambique and Zimbabwe, has been battling to restore confidence following the profit warning, due in part to high levels of debt and interest costs hitting its performance.
Last month, it said it needed to restate prior results because of an accounting issue, extending a 23 percent decline in its shares since the problem was first identified in March.
Tongaat said it and its lenders intended to conclude the standstill agreement, which would include a moratorium on debt repayments excluding interest, in due course.
Tongaat’s net debt stood at 7.754 billion rand ($547.7 million) as of Sept. 30, 2018.
“The lenders have expressed a willingness to conclude a standstill agreement subject to terms and conditions to be agreed, and necessary approvals being obtained,” Tongaat said in a statement to the stock exchange.
They had already entered into a waiver agreement, it continued, which would see them forgo their rights arising from breaches of loan covenants in return for the company taking a number of actions.
These included providing a variety of collateral to lenders against the borrowing, including mortgages on properties owned by Tongaat and the rights to its debtors and inventory, updating them with information on an ongoing basis and limiting financial support to non-South African companies within the group. ($1 = 14.1581 rand)
Reporting by Onke Ngcuka; Editing by Emma Rumney/Keith Weir