South African Canegrowers Bid to Support Tongaat Hullet Amid Liquidation Threat
In a significant turn of events, the South African Canegrowers Association (SACG), representing approximately 23,000 sugarcane farmers, is intervening in a critical legal application seeking to place Tongaat Hullet, a major player in the sugar industry, into provisional liquidation. The stakes are high, with nearly 250,000 livelihoods hanging in the balance.
The recent move comes in light of a failed business rescue plan that involved the Vision Group, raising concerns among growers about their future. Earlier this month, the Vision Group faced allegations of undermining the deal, allegedly making unrealistic demands that led to its collapse.
In response to the urgent application from business rescue practitioners, the Canegrowers Association filed to intervene in the Durban High Court, asserting the necessity of keeping Tongaat operational. They emphasize that liquidation could devastate the livelihoods of countless farmers, threatening the future of the local sugar industry.
On Friday, the case was presented to Judge Sanele Hltshwayo, who noted the involvement of several parties opposed to the liquidation, including the Minister of Trade, Industry and Competition, Parks Tau, and the Industrial Development Corporation (IDC), which had provided financial support to Tongaat. Given the complexity of the case, Judge Hltshwayo decided to adjourn the hearing, establishing deadlines for further submissions from all parties involved.
The urgency of the matter is underscored by the judge’s indication that hearing dates could be set as early as mid-March.
Advocate Ruan van Rooyen, representing the Canegrowers Association, articulated the group’s intention to formally intervene in the proceedings. The association has been vocal about the “profound risk” that liquidation presents, not only to small-scale growers but also to larger agricultural operations.
In a parallel move, Abrina, a company that owns sugar farms contracted to Tongaat, has also sought to intervene. They have called for a collaborative approach among contracted growers to explore temporarily taking over the milling and refining operations. This strategy aims to prevent a total collapse of Tongaat Hullet.
Kadarnath Maharaj, the owner of Abrina, expressed deep concerns over the possible winding up of Tongaat, highlighting that it would negatively impact the livelihoods of thousands and calling for an investigation into the legitimacy of the liquidation application, which he claims appears contrived.
Maharaj voiced skepticism about the conduct of the business rescue practitioners, especially considering that Tongaat received over R2.5 billion in funding post-commencement. He argued that the practitioners could have sought an extension for the business rescue effort instead of pushing for liquidation.
He further criticized Vision’s role, sharing that during the business rescue phase, Vision acquired an R11.7 billion debt, becoming the primary creditor. Maharaj claims this enabled Vision to impose its own rescue plans on other creditors, potentially undermining the entire restructuring process.
The situation escalated when creditors, including RGS Group Holdings, also opposed the liquidation application. RGS has consistently challenged the Vision plan in court and is pursuing a counter-application to dismiss the liquidation attempt. Should they succeed, they plan to propose an alternative rescue plan that would allow Tongaat to continue its operations.
RGS chairman, Momade Aquil Rajahussen, stated that Vision’s plan was “doomed to fail” due to a lack of sufficient funding and failure to disclose critical information to affected parties. He underscored that Tongaat’s survival relied primarily on support from the IDC, rather than any capital infusion from Vision.
Despite the challenges, Vision has committed to “salvaging the business” and is reportedly in discussions with the IDC to ensure the sustainability of operations. The group has claimed to have invested billions into acquiring debts and supporting the management efforts at Tongaat’s plants, as well as engaging with the government on necessary reforms within the industry.
As the situation unfolds, the Canegrowers Association and other stakeholders remain vigilant, recognizing that the future of many farmers and the broader sugar industry in South Africa hangs in the balance. The coming weeks will prove crucial, with further court dates likely to shed light on Tongaat Hullet’s fate.
— Reported by Nexio News
