Despite an ongoing legal challenge, the sale of Tongaat Hulett’s assets and operations in Zimbabwe to Vision Sugar SA is nearing completion.
This forms part of a broader strategy by Robert Gumede’s Vision Investments Consortium, which is set to acquire all the assets of Tongaat, which collapsed after major fraud was discovered on its books.
On December 21 the Vision parties signed a sale agreement for the purchase of Tongaat’s Zimbabwean business, a transaction contingent on the fulfilment of several suspensive conditions.
Vision is an SA investment consortium comprising the Vision principals: Terris AgriPro (Mauritius), Remoggo (Mauritius) PCC, Guma Agri and Food Security, and Almoiz NA Holdings.
The legal challenge initiated by Mozambican company RGS in November seeks to stop the sale of Tongaat Hulett to Gumede’s group of investors. Vision has since asked for financial guarantees from RGS before the case can proceed to trial.
Tongaat entered business rescue in October 2022 after an investigation revealed questionable accounting practices. The court-ordered process typically gives turnaround specialists time to find ways to rescue a financially distressed company while pausing payments on its debt obligations.
Business Day spoke to Gumede and fellow businessman Rutenhuro Moyo, who is also an investor in the consortium.
What is the operational strategy for Vision Sugar once it assumes control of the assets from Tongaat Hulett?
Our priority is to stabilise the assets by providing whatever support their operations need, in terms of strategic direction, resources and management attention.
How will Vision manage the integration of Tongaat’s SA operations into its own? Will there be any changes to the existing structure or workforce?
Most of the early integration will be administrative and legal formalities with the structure and workforce largely unaffected.
Given that Vision Sugar is a subsidiary of Vision Investments, how will it align with the parent group’s long-term strategy for Tongaat’s future growth and recovery?
Both entities are completely aligned. Our long-term strategy is to transform the Tongaat Hulett assets into a modern sugar cane company that diversifies the end-uses of its core product. Those uses are likely to include the production of ethanol, fertiliser and power generation using bagasse and animal feeds using molasses.
How does the creation of Vision Sugar enhance the likelihood of a successful turnaround for Tongaat, especially given its financial difficulties and the ongoing legal challenges?
Once the debt-for-equity offer was rejected, we have been simply moving forward on the next alternative within the approved rescue plan. The financial difficulties have been there since the beginning of the process and we have the resources to manage them. The legal challenges are baseless and at this point only serve as an annoying distraction in the Tongaat Hulett turnaround.
How will you ensure the sustainable and profitable production of ethanol, power generation using bagasse and the use of molasses for animal feeds?
One of our partners — Pakistan’s Almoiz — brings some of the most advanced global expertise in these areas, and we’ll be putting that to work in transforming Tongaat Hulett into a modern, advanced sugar company.
What challenges do you expect in managing Tongaat’s operations, especially with the company facing liquidation risks and financial pressure?
The main challenge is getting the turnaround process moving after things have been so unnecessarily delayed. We have in place the resources required to manage financial pressure.
How do you plan to handle the ongoing legal and regulatory hurdles, including the court challenges to the asset sale?
We believe most of the legal hurdles will come from a spiteful, phantom bidder whose only motivation is to slow the turnaround process. The court challenges have no basis. We will deal with them as necessary, but otherwise our focus is on driving the turnaround so that we can restore the business to sustainable health as soon as possible.
Will there be any changes to the executive or management teams at Tongaat once you assume control?
Given the self-inflicted difficulties at Tongaat Hulett in the past, we will place a heavy focus on ensuring the company has the right leadership and governance structures in place. We will announce those actions in due course.
What do other Vision partners bring to the table?
Our collection of partners was carefully developed to meet the specific needs of transforming Tongaat Hulett. Terris, Remoggo and Guma bring access to the level of capital investment and other resources required to transform the company. Almoiz brings cutting-edge global expertise in modernising agro-processing businesses, including impressive experience in expanding sugar into new markets.
What is the core role of Vision in rescuing Tongaat?
Tongaat Hulett is simply too essential to SA and the Southern African Development Community (Sadc) region to be allowed to fail. We also believe that with the right leadership and business strategy, Tongaat Hulett will not only recover, but it will go on to thrive on a sustained basis. The company is most valuable as a whole enterprise than it is as a collection of parts that could be sold off to make a quick buck.
In the coming months, under the supervision of the business rescue practitioners, we will be transferring Tongaat Hulett assets into a new vehicle owned by Vision, preserving jobs in SA, Zimbabwe, Mozambique and Botswana. We have received the necessary competition commission approvals in SA and Botswana and expect regulatory approvals in Mozambique and Zimbabwe soon, paving the way for the saving of Tongaat Hulett, hundreds of small-scale cane growers and the KwaZulu-Natal sugar industry.
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