Continuing on its quest to turn around its fortunes and effectively start from a new slate, beleaguered sugar and property giant Tongaat Hulett announced a rash of changes to its board this week, including replacing chairman Bahle Sibisi and reducing the size of the board.
In a Sens statement late on Monday, Tongaat said Sibisi and four other long-time board members will step down from its board at the end of this month.
Sibisi, who became chairman after a black empowerment deal with the group several years ago, is being replaced by Louis von Zeuner. Von Zeuner is a relatively new addition to the board, having been appointed in December last year.
The appointment of Von Zeuner and departure of more long-time board members, under whose watch Tongaat hit financial woes and accounting irregularities, has been welcomed by former minority shareholder and well-known shareholder activist Chris Logan.
Speaking to Moneyweb on Wednesday, Logan of Opportune Investments, said Tongaat has made “a good move” in also “cleaning out its old board” following a turbulent year, which saw it suspending trade on the JSE in June.
The suspension came after its share price plummeted, following company announcements in May and June by new CEO Gavin Hudson that it would have to restate its financial results.
Tongaat Hulett first said it had brought in auditing firm PwC to undertake a forensic investigation into the group’s accounting practices. However, after more detail came to light, it revealed that it anticipates reporting a reduction in its equity of R3.5 billion to R4.5 billion.
“Tongaat Hulett had to bring in a new board for credibility sake,” says Logan. “It’s a good move, especially if you look at the recent Financial Sector Conduct Authority fine given to Steinhoff related to its much bigger accounting scandal. Steinhoff effectively paid a smaller fine, partly because of the steps it took in also bringing in a new board.”
“The board at Tongaat Hulett did not have the necessary skills and the deficiency in the board showed in how things have spiralled in recent years…. The announcement of a new board may have come after the horse has bolted, but it is still welcome and will hopefully see a continued turnaround in the company,” adds Logan.
He says Von Zeuner is a “heavyweight” and is well regarded in corporate circles, but has a huge task ahead to turnaround the group, together with the new executive leadership under Hudson.
In its Sens statement on the new board make-up, Tongaat said: “(It) has decided to reduce the number of non-executive directors, as well as revitalise the directorate by replacing a number of long serving members of its board. It is the view of the board that these changes will take the company forward in its efforts to expedite both its turnaround plan and operational objectives, thereby ensuring the long-term sustainability of the organisation.”
It added that by retaining the members of the special restructuring committee, that has been driving the turnaround plan since February, the retention of institutional knowledge and an orderly transition process is also ensured.
As part of its restructuring, Tongaat also announced earlier this year that up to 5000 jobs could be cut within the company’s operations in SA and neighbouring countries. The key property division within the group, Tongaat Hulett Developments, has already seen its staff numbers slashed by two thirds. Moneyweb understands that most retrenchments within the wider group will come into effect at the end of this month, but Tongaat is yet to give details on final job cuts.
In addition to Sibisi, other non-executive board directors stepping down with effect from September 30, include: Rachel Kupara, Thandeka Mgoduso, Brand Pretorius and Dr Tomaz Salomão. Several other company executives and non-executive board members stepped down or resigned earlier this year.
Tongaat said Von Zeuner will assume the role of chairman with effect from October 1. New non-executive board members include noted corporate heavyweights Andile Sangqu, Linda De Beer, Jean Nel and Robin Goetzsche. Fatima Daniels and Stephen Beesley will continue as board members; however, they have been appointed to chair the board’s audit and compliance committee, and social and ethics committee, respectively.
In the Sens statement, outgoing chairman Sibisi welcomed Von Zeuner as the group’s new chairman as well as other new board members. “We are confident that together they will bring new insights and their contribution will strengthen board oversight, as the company embarks on a path of restructuring its business and securing value for its stakeholders on a sustainable basis.”