Tongaat Hulett escapes liquidation
Tongaat Hulett yesterday escaped liquidation after the Industrial Development Corporation (IDC) agreed to increase its funding to R2.5bn, allowing mills to open and 3.8m tonnes of cane to be processed.
But the IDC’s fresh R200m lifeline only keeps the company trading until mid-year, reports News24.
Had the company been placed in unfunded provisional liquidation, the farms of 18 000 canegrowers would have become economically unviable, leading to thousands of rural job losses, the SA Canegrowers association said.
While the milling season had opened in other regions, Tongaat’s mills remained closed pending the outcome of yesterday’s winding up application before Judge Rithy Singh in the KZN High Court (Durban).
Tongaat was placed in business rescue in October 2022.
The Vision Group became the controlling creditor after acquiring its bank loans. It then used its creditor voting power to approve its own business rescue plan.
But in February this year, the business rescue practitioners (BRPS) lodged a winding up application, saying the plan was incapable of being implemented because the Vision Group had shifted the goalposts and was demanding further funding from the IDC and reforms in the sugar industry.
The liquidation application was opposed by some creditors, canegrowers, the IDC, Minister Parks Tau, and the RGS consortium, which had previously put up an alternate business rescue plan and has repeatedly cried foul about Vision’s plan, according to News24.
Prior to the court proceedings, copies of a new, signed agreement, in which the IDC agreed to provide further post commencement funding (PCF) of R200m, were circulated, and posted on the company’s website.
The IDC agreed to increase its PCF commitment from R2.3bn to R2.5bn.
Lawyers for the BRP’s and Vision said the liquidation application should simply be adjourned in the hope that the main parties, Vision and the IDC, could agree on a way forward.
Others argued that the application should be dismissed, otherwise it meant effectively that the BRPs and IDC can only negotiate with Vision.
Singh said it was common cause that it was not in the interests of the stakeholders at this stage that Tongaat ‘the lifeblood of this province’, be taken out of business rescue.
She granted the adjournment until 17 June 2026.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
