The vote to choose a new owner for Tongaat Hulett will be postponed from Thursday but held no later than January 11, high court judge Rashid Vahed has ruled in Durban.
There is a great deal of interest in who will buy Tongaat as the stability of rural KwaZulu-Natal and the livelihoods of 20,000 farmers, many small-scale, are relying on the highly indebted business staying afloat. The business rescue process to save it from bankruptcy and find a suitable buyer has taken 14 months.
The vote by creditors such as banks to choose a new buyer was first postponed from December 8 to December 14. It is likely to be held between January 8 and January 11 as proposed by Tongaat’s business rescue practitioners, Metis Strategic Advisors, in court documents.
The Industrial Development Corporation (IDC), which provided R2.3bn in funding to keep Tongaat running while in business rescue, requires that the new owner be chosen by no later than January 15. It extended the date its debt must be repaid on condition Tongaat is sold by then. The IDC said in court papers it had initially envisioned a new buyer would have been in place by the third quarter of 2023.
There is also urgency that a buyer comes on board as Tongaat will need more money from next year just to keep going, according to court papers filed by the IDC.
The business rescue process, which included the screening of potential buyers, has been long and complicated.
The race has come down to two potential buyers vying for Tongaat: businessman Robert Gumede’s Vision group and the RGS Group, a Mozambican consumer goods and sugar firm run by the politically connected Gulamo family. The bids are detailed in the two business rescue plans.
The Tongaat court case on Wednesday in the high court centred on RCL Foods and the SA Sugar Association's (Sasa's) applications to stop the vote on who may buy the business from taking place on Thursday. RCL Foods and Sasa want to ensure that before a new owner is declared, they will agree to repay them money they believe Tongaat owes.
The highly regulated sugar industry requires farmers and millers to pay a sugar levy to Sasa in a system that ensures all farmers get the same price per tonne. When indebted Tongaat did not pay its levies from October 28 to March 31, farmers and other millers such as RCL paid in extra.
Tongaat’s business rescue practitioners then approached the high court to have the levies suspended, as is the case with payments to creditors under the business rescue process.
Tongaat lost the case two weeks ago, with Sasa, farmers and RCL now wanting what was not paid. Sasa and RCL said in court papers the offers by the potential buyers of Tongaat did not deal sufficiently with how the new owner of Tongaat would repay the levies, or the speed at which it would be done.
The business rescue practitioners will now publish two new business rescue plans detailing how the two bidders will repay the levies, among other things.
RGS said in court papers it is in negotiations with both parties on coming to an agreement to repay what is owed in full. The Vision group has also been in negotiations about the levies.
RCL and Sasa’s court action was postponed on Wednesday and, if they are happy with how the new business rescue plans address the levies when published, they will drop the court proceedings.
RGS also approached the court on Wednesday to ask it to ensure the vote was held on Thursday, but its application was postponed, rendering it unsuccessful.
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