The JSE has suspended Tongaat Hulett's shares in order to protect investors against insufficient financial information.
On Monday, Tongaat Hulett announced in a statement that the Johannesburg Stock Exchange (JSE) has granted its request to suspend trading of the company’s shares.
This comes after Tongaat requested that the JSE suspend the listing of the company’s securities due to the announced delay in the publishing of its financial statements and the continuing review into past financial practices.
The company’s rationale behind requesting the suspension is that “shareholders were advised that the board has concluded that the company’s audited consolidated financial statements for the year ended 31 March 2018 will need to be restated and that the financial information therein should not be relied upon.
“This follows further discussions with the JSE and the company’s auditors, forensic investigative team, legal advisors and management. Similarly, reliance on the company’s trading statement for the twelve months ended 31 March 2019 is no longer appropriate.”
The board said that, as it does not have the necessary degree of certainty to apportion the restatement across the different financial periods, there is not currently sufficiently reliable information to enable the board to update the financial information in the September 2018 interim results or the February 2019 trading statement with confidence.
“Owing to the board’s concern that there is insufficient information in the market to enable investors to make informed decisions, the board has voluntarily approached the JSE with a request for a suspension of the listing of the company’s securities.”
The board stated that its objectives in requesting the suspension are to:
- protect investors in circumstances where there is insufficient reliable financial information in the market on which informed decisions can be made, and accordingly a risk of speculative trading,
- to allow management more time to support the completion of the forensic investigation and the restatements in order to release the March 2019 financial statements, and to seek the reinstatement of the listings, as soon as reasonably possible,
- to address any possibility of there being two levels of information in the market arising from the various processes necessary to be undertaken to restructure and reduce the company’s debt, and
- to allow the company to complete the strategic interview, implement remedial actions and accelerate the turnaround strategy.
Their secondary listing on the London Stock Exchange has also been suspended.
In the statement, the board said that the decision has not been taken lightly. “Whilst the board is conscious that some shareholders or potential investors would prefer to retain the ability to buy and sell shares, the board believes that the temporary suspension is in the best interests of shareholders as a whole.”
