15 January 2024
By: Lloyd Phillips
The tally of Thursday afternoon’s vote by Tongaat Hulett’s creditors on whether to accept Vision’s proposed business rescue plan for the company was reportedly 98,51% in favour and 1,49% against.
Thursday’s vote by Tongaat’s creditors to accept the Vision Parties’ bid and proposed business rescue plan has been met with relief across South Africa’s entire primary sugar cane value chain – especially Tongaat’s thousands of suppliers and employees.
Tongaat has been in voluntary – and often tumultuous – business rescue since October 27, 2022, and if the business rescue plan had been rejected it would have faced liquidation.
Dave Howells, managing director of Tongaat’s Sugar South Africa subsidiary, wrote to his company’s employees and other stakeholders on Friday.
“The vote in favour of the Vision Parties’ business rescue plan [is] positive news for our employees, our businesses across all geographies and our stakeholders,” he wrote.
“While there is still much to be done in our journey, today we are celebrating the achievement of a key milestone. Today finally provides some certainty to stakeholders on the way forward.”
Howells wrote that Tongaat can officially exit business rescue only once Vision’s plan has been substantially implemented and the company is no longer financially distressed.
He also pointed out that during the meeting before Thursday’s vote, Vision representative Robert Bessinger said the company believes Tongaat is a leading sugar and animal feeds business with a good asset base across Southern Africa.
The chairperson of the SA Canegrowers, Andrew Russell, said the association is encouraged that Tongaat’s business rescue practitioners have secured a partner to help save the company’s sugar mills and other businesses. Their operations are “critically important” for their employees and for tens of thousands of small-scale sugar cane growers and their own employees.
However, Russell said SA Canegrowers is awaiting Vision’s confirmation “of its commitment to pay the industry levies owed to the South African Sugar Association (SASA) by Tongaat Hulett”.
Tongaat’s voluntary business rescue left the primary sugar cane value chain in a precarious state and caused uncertainty for growers supplying their harvests to Tongaat’s sugar mills, he said.
“These hardships were exacerbated by the decision of the business rescue practitioners to challenge the legal validity of the financial obligations – more than R900 million – owed by Tongaat Hulett to the industry body.”
African Farming has previously reported that according to the wider primary sugar cane value chain and the Durban high court, Tongaat is liable for these financial obligations in terms of the Sugar Industry Act (9 of 1978) and the Sugar Industry Agreement (1994).
It has also been previously reported that Tongaat’s business rescue practitioners and Vision are likely to approach the court for leave to appeal the previous judgement maintaining Tongaat’s liability for these financial obligations.
Russell said: “The Vision group has yet to commit to payment of outstanding levies before any appeals of the [Durban high court’s] declarator order have been exhausted, leaving open the possibility of further costly and time-consuming litigation”. At the time of publication, African Farming had not yet received statements from SASA and another South African sugar cane miller, RCL Foods, in response to the formal adoption of Vision’s business rescue plan for Tongaat. SASA and RCL Foods have previously been litigants against Tongaat Hulett and its business rescue practitioners.
