Iconic South African company saved from liquidation
The liquidation of Tongaat Hulett Limited has been withdrawn, with the company set to remain in business rescue following an intervention from the Industrial Development Corporation of South Africa (IDC).
The move follows an agreement between the IDC and the Vision Consortium.
The company was placed under business rescue earlier in the decade following a collapse caused by financial mismanagement.
The business rescue practitioners of the sugar producer then approached the High Court for the company’s liquidation, amid a dispute between the IDC and a consortium of potential buyers, Vision.
With liquidation proceedings initially set to commence on 17 June, the company has now been given a lifeline.
The business rescue practitioners, IDC and Vision, concluded a binding agreement that provides a pathway to preserve Tongaat Hulett’s business rescue.
This company will thus maintain trading operations and support the implementation of an approved business rescue plan.
The agreement will also see the IDC become a major shareholder in Vision, which operates companies across South Africa, Zimbabwe, Mozambique and Botswana.
The IDC will also extend post-commencement finance support to the end of September 2026.
It also provides a basis for preserving an estimated 250,000 jobs across the sugar industry value chain and for concluding the steps required for Tongaat Hulett to exit business rescue.
The parties said they have chosen to work together to keep Tongaat operating and to protect the value it holds for employees, suppliers, lenders, and more.
The business rescue practitioners have taken the steps necessary to withdraw the liquidation application before the judge.
The state becomes a shareholder
The IDC will also extend its post-commencement finance (PCF) support to enable Tongaat Hulett to continue trading while the transaction is implemented.
The parties also agreed to restructure the IDC’s PCF into equity as part of the overall transaction framework.
The parties said that this will support a more sustainable capital structure on emergence from business rescue.
Vision will also provide the funding required to settle and address creditor claims, which includes the company’s obligations to the South African Sugar Association, in support of the business rescue plan.
The parties will also conclude new sale agreements for the transfer of Tongaat Hulett’s South African operations to Vision, as well as interests in subsidiaries in Zimbabwe, Botswana and Mozambique.
Vision said that it intends to invest in the recovery of Tongaat’s operations, to support the growers and suppliers who form the backbone of the value chain.
The parties said that their shared objective is to stabilise the business, support the broader sugar value chain, and position the operations for long-term sustainability and recovery.
This article has been updated.
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