9 February 2024
By: Lloyd Phillips
Tongaat Hulett and its business rescue practitioners are fighting back against accusations and legal challenges.
Tongaat Hulett’s three business rescue practitioners have come out strongly against allegations that they acted unethically or inappropriately before their final selection of potential buyers for the beleaguered Southern African sugar giant.
These allegations, presented in court documents and the media, suggest underhanded tactics were used to ensure the rescue plan based on the Vision Parties consortium’s bid was adopted over that based on the RGS Group bid.
RGS reportedly felt so aggrieved that it withdrew its rescue plan the day before a scheduled vote by Tongaat creditors. This vote was to select their preferred business plan for the company. With RGS out of the running, reportedly 98,51% of creditors voted in favour of Vision’s plan.
RGS, which is based in Mozambique and includes sugar milling in its diverse portfolio, did not respond to African Farming’s requests for its list of grievances against Tongaat’s business rescue practitioners. In their own statement, the latter “strongly deny” leaking confidential information or advising the South African Sugar Association, which is a major creditor, not to engage with RGS about its business rescue plan.
“It is also becoming apparent that the real reason for RGS withdrawing their business rescue plan the day before the creditors’ vote was an inability to confirm the validity of funding letters to one or more of the Tongaat Hulett lender group members,” say the business rescue practitioners.
“We take the enormous social impact of the businesses under our care very seriously. We therefore strongly deny allegations of inappropriate or unethical behaviour. The statements made are offensive, baseless and potentially defamatory.”
As African Farming has previously reported, since Tongaat’s voluntary business rescue process began on October 27, 2022, it has been fraught with multiple legal contestations. The most recent were initiated by Powertrans Sales and Services, which is reportedly owed R19,6 million by Tongaat.
Powertrans submitted an urgent application to the Durban high court to have the adoption of Vision’s rescue plan declared unlawful and set aside. It argued that the business rescue practitioners allegedly did not effectively balance the rights and interests of all Tongaat creditors, especially smaller ones such as Powertrans.
“Instead of pursuing this objective [as evidenced by section 7(k) of the Companies Act 71 of 2008], the business rescue practitioners have been beholden only to the interests of the group of banks and financial institutions […] and to the interests of the Vision parties […],” said the application.
“It is indisputable that the general body of creditors and affected persons were not meaningfully consulted by the business rescue practitioners in relation to any of the business rescue plans that have been published. The adopted [Vision] plan does not maximise the likelihood of Tongaat Hulett Limited continuing its existence on a solvent basis.”
On Tuesday, Judge Mbuzeni Mathenjwa ordered Powertrans’ application and an application by RGS for leave to intervene to be “struck off the [court] roll for lack of urgency”. Powertrans was ordered to pay the legal costs of most of the respondents named in its application.
Mathenjwa appeared to support the view of business rescue practitioners’ attorneys that it is evident from the contents of Vision’s rescue plan that there is “no risk of it being implemented imminently”.
He added: “Thus, no irreparable harm can be anticipated and therefore the application [by Powertrans is] not urgent.”
Mathenjwa’s judgment adds that Tongaat’s business rescue is of national interest, with the company’s approximately 1 000 employees and the entire South African sugar industry affected. Therefore, it would be prejudicial to all affected parties and to the administration of justice to enrol “such a complex and voluminous matter” on an urgent basis.
At the time of publication, Powertrans attorneys had not responded to African Farming’s request about their client’s possible legal response to its failed urgent application.To access all documents pertaining to Tongaat Hulett’s business rescue, click here.
