July 08th 2020
Tongaat, Barloworld appoint third party to check for material adverse change.
JSE (Johannesburg Stock Exchange)-listed companies Tongaat Hulett and Barloworld have appointed Rothschild and Co South Africa as the independent third party to evaluate whether a material adverse change (MAC) had occurred in the sale and purchase agreement terms between the companies.
The sale and purchase agreement relates to sugar manufacturer Tongaat disposing of its starch business to a Barloworld subsidiary, KLL Group, which was first announced in February.
Barloworld in May raised concern about the starch business, believing that Covid-19-related impacts on the earnings of the business had resulted in an MAC to the terms of the agreement.
The industrial group said it was reasonably likely that the starch business would achieve 82.5% lower earnings before interest, taxes, depreciation and amortisation for the financial year ending March 31, 2021, compared with the year ended March 31, 2020.
Tongaat, however, disagrees that an MAC has occurred.
The companies, therefore, decided to refer the matter to an independent accountant to determine if such a change had taken place.
South Africa’s competition authorities have this week given their approval for the transaction, which cannot be completed until the MAC matter is resolved.