After an extensive Business Rescue Process, the financially distressed JSE-listed sugar producer and property developer, Tongaat Hulett, may finally see resolution.
Instead of facing liquidation – an outcome that would have adversely affected employees, farmers, and unsecured creditors – the venerable century-old sugar miller is set to be acquired by the Vision Group.
Vision Partners, comprising Guma Agri & Food Security Group, Zimbabwe’s Remogogoo Investments, the Terris Fund, and Pakistani sugar giant Almoiz, has submitted a comprehensive business rescue plan.
The plan entails the acquisition of Lender Group claims and security, totaling about R8 billion, with approximately R4.1 billion of these claims to be converted into new equity in Tongaat Hulett Limited.
During a meeting with creditors, the Vision Partners’ business rescue plan received overwhelming approval, with 98.51% of attendees voting in favor and only 1.49% against.
This approval grants the partners a significant 97.3% ownership stake in the company, while existing shareholders retain a 2.7% interest in Tongaat equity following the debt-to-equity conversion.
This agreement marks the conclusion of a protracted and fiercely contested process, which saw multiple court appearances and proceeded only after the withdrawal of a threat to interdict the process by RCL Foods, owner of Selati Sugar, over unpaid levies.
Additionally, it secures job stability for tens of thousands of individuals whose livelihoods are intertwined with the industry in KwaZulu-Natal.
While some small unsecured creditors express reservations about the deal, they acknowledge its superiority over liquidation.
Several have welcomed the BRP, albeit with a preference for another bid by the RGS group, which they believe would have been more advantageous for them.
One unnamed creditor lamented, “Under the RGS plan, we would have received around 65 cents on the rand. As it stands, we will only receive a small fraction of what we are owed, constituting a devastating loss for our small organization.”
RGS Sugar withdrew its bid, alleging in a letter to business rescue practitioners that the process had been manipulated in favor of Vision, and they feared their bid would be undermined even if successful.
Tongaat Hulett entered business rescue in October 2022 when it was revealed that key former executives had allegedly manipulated accounts for years.
At one point, Tanzania-based Kagera Sugar was proposed as the preferred strategic equity partner, intending to acquire all Tongaat’s sugar assets, including Tongaat Hulett Limited (THL) in South Africa and its investments in Mozambique, Zimbabwe, and Botswana.
However, the deal fell through, with reports suggesting Kagera Sugar struggled to secure funding.
“This development finally provides some certainty to stakeholders on the way forward. This is positive news for employees, businesses across all geographies, and THL’s stakeholders,” stated Business Rescue Practitioners Metis Strategic Partners.
While the Vision deal signifies a significant step forward, the business will continue to operate under business rescue.
Tongaat Hulett can only exit business rescue once the plan has been substantially implemented, a process that could take several months, according to a statement from the BRPs, or if it is no longer financially distressed.”
