INDUSTRY players yesterday welcomed the announcement that a grower-led consortium of all Tongaat Hulett-supplying growers had submitted a proposal to acquire the ailing business’s sugar assets.
In a statement, the consortium said it had submitted an expression of interest to Tongaat Hulett’s business rescue practitioners to buy its South African assets, including the operating mills at Maidstone, Amatikulu, and Felixton, the mothballed factory at Darnall, the Huletts refinery, Voermol animal feeds, and all associated brands and trademarks, the consortium said.
“The offer is made on behalf of growers delivering more than five million tons of sugar cane to the Tongaat Hulett mills in the North Coast of KwaZulu-Natal to ensure the survival of these farming operations, the thousands of livelihoods they support and socio-economic stability for the greater region,” the group said.
“Agreements would need to be signed expeditiously to enable off-crop maintenance to be completed in time to ensure that the mills are operational for the 2023/2024 season.”
If the acquisition is approved the assets will be held by unlisted limited liability company NewCo.
“The proposal is underpinned by a vision of an inclusive collective investment in the assets of NewCo, which will be held by all Tongaat Hulett-supplying growers in a single investment vehicle with a majority shareholding for supplying black growers.
“This will ensure that NewCo meets the industry’s transformation objectives in the long term. As small-scale growers are generally unable to securitise land, alternative funding methods will need to be explored in order to achieve this vision,” the group said.
Discussions are under way to secure 2023/24 working capital requirements through trade finance arrangements, the group said.
On the growers’ proposal, the Tongaat Hulett business rescue team said: “The business rescue plan will be presented at the end of January 2023 when we will update the market in detail on the business rescue process.”
SA Canegrowers said it was encouraged that there were some developments in the Tongaat Hulett matter, but was not in a position to comment on the proposal at this time.
Abrie Rautenbach, the head of Absa AgriBusiness for Relationship Banking at Absa Group, said Absa was glad that prospective buyers had stepped up to make an offer as it would create a win-win situation for all parties.
“The timing of these solutions is critical as we enter the period for mill maintenance and replanting. We wish them every success in their bid, as it is important to create stability in the industry.” he said.
Tongaat is a significant player in the sugar industry with interests both up and down the sugar value chain.
“It is in no one’s interest for them to fail or disappear. These mills and their associated infrastructure need to remain in operation to ensure the livelihood of these growers. An initiative such as this would bring stability to the industry and provide a possible solution to the current uncertainty faced by growers, farmworkers, mill employees and the greater communities in which they operate,” Rautenbach said.
Tongaat Hulett has been in financial distress after financial fraud was uncovered at the firm. In October, it entered business rescue. - Additional reporting by Given Majola
BUSINESS REPORT