South Africa’s heavily indebted sugar producer Tongaat Hulett is in a deadlock over the sale of its starch business to Barloworld over a condition set during the signing of the deal, the two companies announced on Tuesday, May 12.
Tongaat agreed to sell the business to Barloworld for 5.35 billion rand (US$290.70 million), including debt, in February, reported Reuters.
The deal is subject to certain conditions including that no “material adverse changes” (MAC) must occur after the signing of the agreement that could affect the business.
Barloworld said in a statement that a MAC had occurred given the effects of the coronavirus pandemic, which is likely to lead to a drop of about 82.5% in earnings before interest, taxes, depreciation, and amortization at the starch business for the financial year ending March 31, 2021.
Tongaat, however, is firmly of the view that a MAC has not occurred and has advised KLL Group, a wholly owned subsidiary of Barloworld, it said in a separate statement.
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