The three Tongaat Hulett business rescue practitioners have received several expressions of interest to buy the group in its entirety or some of its assets, including a consortium comprising of black and other sugar farmers.
“Several interested parties have approached us. Some have approached us to acquire individual assets. Other parties are interested in acquiring the South African sugar assets,” business rescue practitioner Trevor Murgatroyd said during a Tongaat Hulett shareholder meeting on Friday. “Certain parties want to buy the non-South African assets, and other parties are interested in taking over the whole group.”
Business rescue practitioner Peter van den Steen said developing an expression of interest into something bankable took time, effort and due diligence.
“We are a long way from that,” he added.
One of the interested parties that have gone public is a consortium backed mainly by sugar farmers, who submitted an expression of interest to the business rescue practitioners last month. The grouping wants to acquire the company’s South African mills, including the Maidstone, Amatikulu and Felixton mills and the mothballed factory at
Darnall, the Huletts Refinery, Voermol Feeds and all the milling company’s brands and trademarks.
Simon Cleasby, the consortium’s spokesperson, told Sunday World its plan was for black sugarcane growers supplying Tongaat Hulett to own a majority shareholding in the Tongaat Hulett assets that the consortium wants to buy.
Such a move would be a possible step forward for the sugar industry’s long-term transformation goals.
The consortium’s goal is to include all the sugar farmers, made up of over 11 000 small-scale growers and 400 commercial growers who supply over 5-million tons of sugarcane annually to Tongaat Hulett mills on KwaZulu-Natal’s north coast.
The consortium is also a move by the sugar farmers to find a long-term solution to the Tongaat Hulett milling crisis and an attempt to save 20 000 jobs and support thousands of people who rely on those jobs and maintain regional socio-economic stability.
“There are various permutations that will dictate the length of the business rescue. We secured emergency post-commencement finance of R900-million that enabled us to make critical payments. We are in negotiations for further funding that should assist us in getting to the end of the season in March 2023.”
Cleasby said the rescue practitioners acknowledged receipt of the consortium’s proposal, but there had been no further response.
“No meetings about the expression of interest have been held with the business rescue practitioners. However, it is our sincere hope that this will change soon as the consortium is eager to progress this matter.”
In addition, the business rescue practitioners must formulate a business rescue plan by 31 January 2023.
Tongaat Hulett’s board of directors placed the company into business rescue at the end of October as it could not service its debt following years of mismanagement. The group’s South African assets are in financial distress, while its
Botswana, Mozambique and Zimbabwe sugar operations are financially sound.
South African Canegrowers CE Thomas Funke said the primary effect of the decision by the Tongaat Hulett’s board was the threat it posed to the sugar industry’s future. The entire sector supports 1-million people. The immediate impact of Tongaat Hulett’s entry into business rescue was immense for sugar farmers, Funke said.
“Payment deadlines were missed, leaving growers unable to pay their workers, service their debt and manage operational costs. Thankfully this was resolved quickly as an agreement was reached that saw payments made to
growers with priority given to small-scale growers,” he added.
Tongaat Hulett’s woes are another whammy for the sugar industry, which is facing pressure from sugar imports and the Health Promotion Levy on sugary beverages, which came into effect in 2018. That levy reduced local sugar demand.
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