Tongaat Hulett’s court bid to avoid paying sugar industry obligations while in business rescue was dismissed on Monday.

The embattled sugar giant and Gledhow Sugar Company had together failed to pay more than R1.5-billion in levies due at the end of March, citing ongoing business rescue proceedings.

After the South African Sugar Association (Sasa) sought repayment, Tongaat Hulett took to the courts to prevent the claim from being granted.

The case was argued in the Durban High Court in September and was dismissed by judge Rashid Vahed with costs on Monday.

The judgment was welcomed by industry stakeholder group, the South African Canegrowers Association.

“Critically, the judgment takes into account the purpose of the Sugar Industry Agreement, that being to ensure that all parties – growers, millers and refiners – benefit from an equitable division of the proceeds of the local market and are insulated against the risk of the export market,” said SA Canegrowers chairman, Andrew Russell.

The Courier previously reported that levy defaults by Tongaat Hulett and the Gledhow had dropped sugar growers’ RV price – a measure of returns on a cane crop once processed – by 8%.

“It is our hope that the business rescue plans will be revised to accommodate the payment of the industry obligations upheld by the High Court,” said Russell.

“Failure to do so will needlessly prolong what has already been a protracted and costly process for the entire industry and will continue to put thousands of livelihoods at risk.”

Tongaat Hulett published a revised business rescue plan on November 29 and creditors will have the opportunity to vote on it on Friday.

Headlining the plan was news that previous preferred bidder, Kagera Sugar Limited (Tanzania), had been axed following a demand for exclusivity in the bidding process.

Two further takeover offers have been presented, from Mozambican conglomerate RGS Group, and a consortium of Terris Sugar, Guma, Remoggo and Almoiz.

It is unclear whether the sugar levy judgment will delay the business rescue plan.

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