Mozambican consumer group RGS pulled out the day before the vote to buy Tongaat Hulett but says it is still the best buyer for the business and a small “window of opportunity” exists to overturn the ownership by Vision Consortium.
Vision, headed by SA businessman Robert Gumede and Zimbabwean Rute Moyo, acquired the sugar producer on January 11 for an undisclosed sum by buying a portion of the lenders’ debt, which totalled almost R8bn.
RGS, led by the politically connected Gulamo family, is seeking to intervene in a supplier’s existing case before the high court in Durban, which asks that Vision’s purchase of Tongaat be overturned.
In its court papers, RGS says “a narrow window of opportunity has arisen in terms of which the unlawfulness of the adopted plan and the manifest injustice visited upon the general bodies of creditors may be reversed and substituted with a fair and lawful alternative”.
According to court papers filed by RGS, Vision has not paid the bankers for the debt yet in a deal that leaves ordinary suppliers getting 5c for every R1 owed, and sugar farmers expected to wait years and endure a court battle before they get the R525m in levies they are owed.
RGS’s court papers claim business rescue practitioners Metis conspired to favour the winning bidder Vision at its expense. RGS came to an agreement with sugar farmers in which they agreed to pay R525m of the more than R800m owed in outstanding levies. Vision’s business rescue plan then included the same figure, which means Metis leaked confidential information to Vision, RGS claims.
RGS also alleges that Metis advised the SA Sugar Association, which represents the industry, not to meet it about its offer. It says it tried to do due diligence on Tongaat and provides letters requesting this from April in the court documents. However, it claims it was never given access to the sugar producer’s management team.
No details of what Vision will pay have been disclosed and no information given on how it will fund the business in the future.
Supplier Powertrans and its owner Mohini Naidoo in court papers filed to have the deal overturned accused Vision of getting Tongaat at “a staggering discount”.
RGS said the “total lack of transparency ... and separate secret agreement concluded between Vision and the lenders permeates every aspect of Tongaat’s business rescue”.
However, when creditors voted on who could buy Tongaat, only Vision’s offer in the form of a business rescue plan was on the table with RGS having withdrawn the day before.
When it withdrew from the bid to buy Tongaat Hulett at the eleventh hour, it did not have the required R2bn deposit in its bank, despite a letter saying it did.
RGS offered about R8bn for the business, which includes R2.3bn to be repaid to the Industrial Development Corporation (IDC) for funding it provided and more than R400m for ordinary suppliers who are owed more than R1bn.
In court papers, it emerges RGS needed to prove it had R2bn upfront for the deal before the January 11 vote.
RGS said it was not legally possible to transfer money to an SA bank account before the deal was concluded as the firm would not get approval from the central bank of Mozambique. This could only be granted after the deal was concluded.
Instead, a letter was provided to Absa SA and the business rescue practitioners showing that Absa Bank Mozambique held the R2bn.
However, the money was not there. RGS said in court papers that a junior employee had decided not to place the funds in the Mozambican account as they would not earn sufficient interest. But the employee acquired a letter saying that funds were available.
“Though RGS deeply regrets this unfortunate incident, its senior management played no part and was ignorant of the untruthful statements inadvertently made to Absa SA.”
RGS said it has hired a law firm to investigate why the fraudulent letter was provided to Absa SA.
It said it has the money and a new deal on the table that would be far superior to Vision’s and would pay sugar farmers the levies they are owed and suppliers almost half of what they are owed.
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