Business Rescue Practitioners for the ailing Tongaat Hullett's two subsidiaries, Tongaat Hulett Limited and Tongaat Hulett Development Proprietary, have entered into an agreement with cane growers, both informal and commercial to make outstanding payments within the current month while plans are afoot for the group to resume operations next week.
In a statement, The South African Sugar Cane Growers Association (SASA) said they had accepted a proposal by the Tongaat Hulett Limited BRPs that ensures payments owing to growers for cane delivered to Tongaat Hulett mills.
The agreement covers payments still outstanding to cane growers and industry service providers, as well as the payments that will be due at the end of November for the cane delivered in October 2022.
"But the crisis for the industry is far from over. It remains to be seen whether Tongaat Hulett will be able to secure the funding needed to complete the off-crop maintenance that is required for its mills to operate next season. The risk remains that Tongaat Hulett will not emerge from business rescue, once again plunging the industry into a crisis," SASA Chairperson Andrew Russell said.
Under the agreement, outstanding October payments to commercial growers for sugar cane delivered in September will be made by Friday, 11 November 2022. Payments due to small-scale growers at the end of November 2022 for sugar cane delivered in October will be paid in full, while suitable terms have been agreed upon for staggered payments to commercial growers.
SA Cane growers also emphasised the necessity of payments to industry service providers such as contractors, haulier companies, and input suppliers without whom growers cannot operate. The business rescue practitioners have confirmed that the outstanding payments to service providers will also be effected this week, together with payments to commercial growers. Most commercial growers have already received the October payments.
Russell said it was still essential that critical stakeholders, including government and lenders, work with the industry to ensure the success of the business rescue process. This is why SA Cane growers continue to implore Minister of Trade, Industry and Competition Ebrahim Patel and Minister of Agriculture, Land Reform, and Rural Development Thoko Didiza to meet with industry stakeholders to address this situation.
The demise of Tongaat Hulett would undo years of work under the Sugar cane Value Chain Master plan, reversing efforts to shield the local market from cheap sugar imports and protect the one million livelihoods that depend on the sugar industry.
The business rescue practitioners (BRPs) of Tongaat Hulett Limited and Tongaat Hulett Development Proprietary Limited met with creditors on Tuesday, as required in terms of the Companies Act. At the meeting, the BRPs updated creditors on the current status of the business rescue process, which includes the successful advancement of the initial amounts of urgent post-commencement finance, which facilitated payments to certain critical suppliers and/or creditors, including small-scale growers. The BRPs continue their efforts to obtain additional post-commencement finance.
The BRPs also sought approval from creditors for an extension of the date for publishing of the business plan to the end of January 2023. Commercial growers agreed to waive their claim for interest due on delayed payments in recognition of the difficult position Tongaat Hulett finds itself in and in the interests of other affected stakeholders.
"Growers had required payment prior to any resumption of supplies to Tongaat Hulett. Once the outstanding October payments are effected, growers will resume deliveries to the mills in Felixton, Maidstone, and Amatikulu, enabling Tongaat Hulett to resume operations at its mills and refinery, and to once again generate cash flow," Russell said.
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