Cane growers welcome Gledhow Mill takeover
"There had been concerns of liquidation but we've avoided that and now there is some much needed certainty and confidence going forward" - Gledhow Grower Council chairman, Guy Heenan.
Almost all Gledhow Sugar Company creditors voted in favour of Ushukela Consortium as the company’s new buyer last Friday.
But Gledhow has largely been able to weather the storm and all 440 employees will remain employed and have contract protection through the remainder of the business rescue process.
It is estimated that at least another 3 400 people are employed by growers who supply the mill.
“The feeling from the growers’ perspective is very positive,” said Gledhow Grower Council chairman, Guy Heenan.
“Obviously there had been concerns of liquidation but we’ve avoided that and now there is some much needed certainty and confidence going forward.”
Heenan confirmed the readiness of the mill ahead of the start of the crushing season on April 4.
“The mill was completely operational throughout the business rescue process and off-crop maintenance has been kept up,” he said.
“There is also a full maintenance plan and capital expenditure outline included in the business rescue plan.”
Per the business rescue plan, R35-million is being spent on capital expenditure and R90-million on off-crop maintenance in 2024.
Industry stakeholder body, the South African Canegrowers Association welcomed the result of the takeover bid.
“SA Canegrowers is optimistic about the positive impact the Ushukela Consortium will have at Gledhow sugar mill,” said SA Canegrowers CEO, Dr Thomas Funke.
“Our leadership has met with their team on a number of occasions and, based on these engagements, we believe they can bring considerable benefits to the business. This in turn will have a positive effect on the stability of the industry.”
Dr Funke said he was optimistic about the future of the industry at large after a tumultuous period since Tongaat Hulett announced their business rescue proceedings in October 2022.
“After long and difficult period at both mills, SA Canegrowers welcomes the progress made in relation to both business rescue processes,” he said.
“We wish the new owners all the best as they conclude the businesses rescue processes and begin to work in earnest to turn the companies around.”
The takeover does not signal an immediate end of business rescue proceedings and there remains work to be done before the company is financially stable again.
Takeover deal breakdown
Ushukela Consortium’s plan is headlined by full payment of R187.9-million to Gledhow’s two secured creditors, RMB (R154.8-million) and the Industrial Development Corporation (R33.1-million).
Growers who have combined post commencement finance claims of R37.8-million will initially receive 10%, with the rest paid within six months.
Ten percent of outstanding South African Sugar Association (SASA) claims, totalling some R230.2-million, will be paid up front with the rest split into three equal payments over the next three financial years.
The outstanding sugar levy implemented by SASA of R74.7-million will be ring-fenced until court proceedings around the matter have been completed.
Concurrent creditors, who have combined claims of R92.1-million, will be paid 12 cents on the rand.
Per the business rescue plan, only RMB would have received dividends had Gledhow entered liquidation.
Ushukela Consortium also intends to raise another R330-million in working capital, which will be secured by Gledhow’s assets and a corporate guarantee by Ushukela.
The consortium is made up of the Sokhela sugar family and the Chatthe Sugar Company from Kenya.
For the purposes of the takeover, Ushukela Holdings was registered and comprises Sokhela Sugar and Muell Estates.
The Ushukela names should not be confused with Ushukela Milling, who owned the Gledhow Sugar Company between 2004 and 2009, later retaining 34.9% ownership.
Ushukela Milling, Ushukela Holdings and the Ushukela Consortium are separate entities, although they are understood to be controlled by the Sokhela family.
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