Chris Logan on Tongaat’s monster R4bn rights issue

Opportune Investments founder Chris Logan has a closer look at Tongaat’s massive R4bn proposed rights issue. The embroiled agri-processing business has a market value of around R1bn, which means it will raise equity capital of up to four times its value. Logan discusses the reasons why Tongaat finds itself in this precarious position, after years of mismanagement and fraud from senior executives. The capital raise, given the size, is likely to be extremely dilutive and at a significant discount to its shares, currently. In early morning trade following the announcement, Tongaat was down close to 50% before paring losses to close 24% lower. The pricing of the rights issue will be of particular interest to Tongaat shareholders, who will be expected to pay up in order to their pro rata share holding in the company. Logan says the rights issue was largely unavoidable, given the operational mishaps and Covid-19 that have caused a troublesome period for the once high-flying business. Learn more about your ad choices. Visit megaphone.fm/adchoices