Sugar giant Tongaat Hulett’s creditors have officially approved a buyer, but more than R500-million in levies hangs over the takeover process.

Last week, the company’s creditors overwhelmingly voted to approve the Vision Parties’ business rescue plan, essentially ushering them in as the controlling interest behind the company.

Vision Parties, which is led by businessman Robert Gumede, includes Terris Sugar (South Africa), Guma (Mauritius), Remoggo (Zimbabwe) and Almoiz Industries (Pakistan).

Their plan outlines a debt purchase of around R8-billion, R4.1-billion of which will be recapitalised into equity.

It makes further provisions for unsecured creditors, who will be paid pro rata from a flat sum of R75-million.

Also read: Fallout fears as Tongaat Hulett goes into business rescue

Tongaat Hulett’s business rescue practitioners (BRPs) said the plan would allow the company to keep all current staff employed.

At a meeting last Wednesday, 98.51% of creditors present voted to approve the plan.

“This finally provides some certainty to stakeholders on the way forward. This is positive news for employees, the businesses across all geographies and THL’s stakeholders,” said the BRPs.

“While there is still much to be done, we are celebrating the achievement of a key milestone.”

The Vision Parties plan was the only one left on the table after Mozambican conglomerate RGS withdrew their offer the night before the creditor meeting, alleging unfair treatment in the bidding process.

That has not been the only controversy over the past few months of the 16-month long business rescue process.

Tanzania’s Kagera Sugar was initially identified as a preferential bidder before being axed for demanding exclusivity in the bidding process.

And a court case between the South African Sugar Association (Sasa) and Tongaat Hulett remains an obstacle to takeover.

Sasa took the Tongaat Hulett BRPs to court over R526-million in unpaid sugar industry levies in a bid to compel them to include the levies in any future business rescue plans.

They won the initial court order in December, but an appeal process was still under way.

The South African Canegrowers Association said they remained concerned about the outstanding payment.

“While the vote marks a critical step forward in the effort to save Tongaat Hulett, SA Canegrowers awaits confirmation by the Vision Group of its commitment to pay the industry levies owed to Sasa by Tongaat Hulett,” said SA Canegrowers chairman, Andrew Russell.

“The Vision Group has yet to commit to payment of the outstanding levies before any appeals of the declarator order have been exhausted, leaving open the possibility of further costly and time-consuming litigation.”

“Nevertheless, while this critical matter remains unresolved, SA Canegrowers is encouraged by the BRPs success in securing a partner to help save the mills operated by Tongaat Hulett.”
The adoption of the Vision Parties plan does not end the business rescue process.

Tongaat Hulett’s BRPs will remain active until such point when the plan has been fully implemented or until the company is no longer financially distressed.

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