A consortium led by business mogul Robert Gumede’s Guma Agri has expressed disappointment after sugar giant Tongaat Hulett Limited (THL) shareholders voted against a resolution promoting the debt-to-equity swap.
Voting in favour of the debt-to-equity swap would have resulted in Vision Investments receiving 97.3% of the shares in Tongaat Hulett and the current shareholders retaining 2.7% of the JSE listed shares.
Vision Investments is also led by Zimbabwean businessman Rutenero Moyo of Remoggo, Amre Youness of Terris Sugar and Nauman Khan of Almoiz.
In a statement released by Tongaat Hulett on Thursday, the company stated that the business rescue practitioners would continue to implement a plan to sell the company’s assets as a going concern, as a group, to Vision.
After the meeting on Thursday, Vision Investments voiced its disappointment.
“The company believes that the debt-to-equity swop would have resulted in Tongaat being recapitalised with a stronger balance sheet, which would have placed it in a position to exit business rescue and be set for future profitable growth and expansion,” said Vision’s spokesperson Rob Bessinger.
To improve the balance sheet of Tongaat, Vision had proposed a debt-to-equity swap, whereby R5-billion of the R8.6-billion debt owing would be swapped for fresh equity being issued by Tongaat to Vision.
The residual R3.6-billion of debt still owing to Vision would be held as subordinated long-term debt in Tongaat.
“Although we are disappointed that the current shareholders will ultimately no longer participate in the business, we have no regrets with the process that has been followed as Tongaat’s current shareholders exercised their democratic right when it came to the first option available to the business rescue practitioners to execute the approved Vision business rescue plan.
“We understand their disappointment and disillusionment as they have seen their investment destroyed by the fraudulent activities of previous THL management.
“However, Vision is not to blame as our role is to invest our own money and skills into saving THL and jobs and we are not linked to THL’s dramatic erosion of shareholder value.”
The company was placed into business rescue in October 2022.
Bessinger vowed that the vote would not stop the implementation of Vision’s business rescue plan that was approved by the THL creditors in January 2024.
“Furthermore, the South African Competition Tribunal recently approved x“Vision’s acquisition of THL,” he said.
Bessinger stated that voting in favour of the debt for equity swap would have also seen Tongaat remaining listed on the JSE and, take a step closer to coming out of Business Rescue by next month as a precursor to returning to a “business as usual” situation.
“Today offers us an opportunity to move forward with the second option available to execute the approved Vision Business Rescue plan so as to take the business forward and save jobs in all jurisdictions THL operates in.
“In terms of the second option available to execute on the approved Business Rescue plan, Vision will proceed to access its right to conduct a debt for asset swap of all THL assets that are included in the current debt package linked to the R8.6-billion of secured debt.
“The debt package includes all the assets in the operating businesses in South Africa as well as all shares in the operating businesses across the other SADC jurisdictions.
“This second option allows us to move forward with a new unlisted entity, giving Vision a fresh start without any legacy obligations. With all the assets, including the THL brands, in a new unlisted company owned 100% by Vision, we will honour the Competition Commission Tribunal’s ruling that includes taking over the THL staff and supporting the small-scale growers.
He said the vote meant the current shareholders shall receive zero value for their shares and the THL entity devoid of assets being ultimately wound down/liquidated through the business rescue process, closing the curtain on the 100+ year old JSE-listed THL.
“In terms of the Vision Business Rescue plan approved by THL creditors on 11 January this year, the unsecured creditors will be paid R75-million by Vision. The R75-million is securely in a bank account and will be escrowed shortly for distribution to the unsecured creditors,” said Bessinger.
He added that Vision has ambitious and well-researched plans for THL, including diversification and expansion into energy (ethanol & electricity) to help alleviate the energy supply and costs in the region.
“These plans include overall yield improvements and will lead to growth of area under sugarcane and the creation of sustainable jobs and small-scale sugarcane growers.
“With Africa still being a nett importer of sugar, Vision is also looking at the potential of new capacity and capability in suitable jurisdictions that have substantial markets and supply deficits.
“Vision is a long-term investor who is committed to creating more sustainable jobs and empowering small-scale sugarcane growers across the regions,” said Bessinger.
