Government bails out Tongaat Hulett for the season
While welcoming the funding update, NewCo spokesperson Simon Cleasby raised concern about the 2023 season which begins in less than four months.
Government funding has allowed Tongaat Hulett to pay its cane growers for the rest of the current season, but concerns remain going forward.
On December 28, Tongaat Hulett’s business rescue practitioners (BRPs) announced they had secured an undisclosed amount of “post-commencement” funding from the state-owned Industrial Development Corporation (IDC).
“This funding ensures that we are able to continue making payments to employees, growers and other suppliers whose livelihoods depend on Tongaat Hulett. We thank IDC for the speed of implementation and their pragmatic approach and thank all other stakeholders for their continued commitment to and support of Tongaat Hulett,” said the BRPs in a statement.
They said the funding would also allow them to focus on the rescue process for Tongaat Hulett’s underlying businesses.
This process is expected to play a significant role in the business rescue plan which will be delivered at the end of January.
While welcoming the funding update, NewCo spokesperson Simon Cleasby raised concern about the 2023 season which begins in less than four months.
NewCo is a grower-led consortium which submitted an expression of interest to acquire Tongaat Hulett in November last year.
“The BRPs success in securing this funding, while critical, is not enough to save Tongaat Hulett and the livelihoods that rely on its operations. More than loans, Tongaat Hulett needs a plan to restore its operations to profitability, thereby making them sustainable in the long-term,” said Cleasby on December 29.
Cleasby estimated there was a carryover of more than 500 000 tonnes of cane, equivalent to just under one month of milling capacity for Tongaat Hulett on the North Coast.
This will need to be crushed in the next season to provide operating cash flow to growers, who also need to finalise upcoming operations.
For now however, growers are forced to play a waiting game until the business plan emerges.
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