Tongaat Hulett’s (THL) rescue from liquidation by the Vision Consortium was broadly welcomed by the sugar industry on Friday, but representative bodies still await the payment of industry levies owing to the South African Sugar Association (Sasa).
The association, a regulatory body for the sugar industry, on Friday welcomed the creditors’ vote the day before in favour of the adoption of Vision’s business rescue plan for the region’s biggest sugar producer, thereby averting the liquidation of THL and paving the way for implementation of the plan.
“We are pleased the process produced a positive result. All industry stakeholders, including government, have been fully committed to saving THL since the start of the business rescue process. The sustainability of the industry remains one of our core priorities,” said Sasa independent chairperson advocate Fay Mukaddam.
She said Sasa would work together with Tongaat’s new owners to ensure the successful implementation of the business rescue plan.
Reacting to the news, SA Canegrowers chairperson Andrew Russel said: “While the vote marks a critical step forward in the effort to save (THL), SA Canegrowers awaits confirmation by the Vision Group of its commitment to pay the industry levies owed to the Sasa by THL.”
THL’s entry into business rescue in October 2022 had left the industry in a precarious state, and caused great uncertainty for thousands of growers who rely on the company’s mills on the North Coast of KwaZulu-Natal.
These hardships were exacerbated by the decision of the business rescue practitioners to challenge the legal validity of the industry financial obligations, an amount, according to Russel, of “more than R900 million owed by THL to the industry body”.
He said the withdrawal by the Mozambique-based RGS Group of their bid to acquire THL dealt a further blow to the process, just one day before the vote on the business rescue proposals.
“That offer had included a firm commitment to honour the obligations of THL to pay the industry levies owed to the Sasa,” said Russel.
He said the Vision Group had yet to commit to payment of the outstanding levies before any appeals of the declarator order had been exhausted, leaving open the possibility of further costly and time-consuming litigation.
“While this critical matter remains unresolved, SA Canegrowers is encouraged by the BRPs success in securing a partner to help save the mills operated by THL. Tens of thousands of small-scale growers and workers depend on these mills, therefore maintaining their operations is critically important,” said Russel.
THL’s South African sugar business and its property arm entered voluntary business rescue on October 27, 2022, as the company was financially distressed.
THL on Friday said it “can only exit business rescue once the plan has been substantially implemented (which could take several months) or alternatively if it is no longer financially distressed”.
Russel said: “Our priority remains the successful conclusion of the business rescue process that revives THL and protects the livelihoods that depend on its operations.”
THL’s business rescue plan makes provision for the payment of “100 cents in the rand” of all the amounts owed to Sasa, subject to a “declarator appeal process”.
As at October 31, THL’s major creditors were R7.7bn to its lenders, R2.12bn to the Industrial Development Corporation and R1.6bn to Sasa, while unsecured creditors were owed R989.27 million.
BUSINESS REPORT