Press releases

Independent Expert determines a Material Adverse Change did not occur in the transaction between Barloworld and Tongaat Hulett


22 September 2020

Transaction between subsidiaries will continue as per original agreement

Barloworld Limited ("Barloworld") today announced that the proposed transaction between its subsidiary, KLL Group, and Tongaat Hulett Starch ("THS") has reached another significant milestone. This follows after Rothschild & Co South Africa, who were appointed independent expert, determined that a Material Adverse Change ("MAC") has not occurred as the EBITDA of THS for the year ending 31 March 2021 will not be less than 82.5% of its EBITDA for the financial year ended 31 March 2020.

This determination demonstrates the resilience of the THS business, which maintained its profitability throughout the COVID-19 related lockdowns and restrictions imposed in South Africa.

Barloworld CEO, Dominic Sewela said: "While the uncertainty created by the COVID-19 pandemic necessitated the Board to issue a MAC notice, we have remained of the view that THS will be a valuable addition to the Barloworld portfolio."

During the period, Barloworld has continued to perform in terms of our obligations as per the Sale and Purchase Agreement ("SPA"). With the MAC determination now concluded, the transaction will continue as per the original agreement, subject to the fulfillment or waiver of the remaining conditions.

Sewela concluded: "THS is a defensive business that will bolster the resilience of Barloworld as it is less cyclical than the businesses in our existing portfolio. It is highly cash generative, relatively asset light and has a leading market position and strong client base of highly regarded and well established multi-national companies.

As the lockdown regulations have eased, we have seen the momentum build in the THS business. The long-term prospects for THS are exemplary as it is the sole manufacturer of starch and glucose in South Africa and supplies more than 85% of the South African market as well as exporting to regional markets. It offers a unique geographic positioning and growth opportunities for Barloworld to strengthen our portfolio in order to achieve our long-term value delivery aspirations."