Vision Consortium has secured money to pay the remaining amount due to Tongaat Hulett’s creditors, with the sugar company having been offered a lifeline by billionaire Robert Gumede’s group as part of the business rescue process.
The business rescue plan aims to convert most of Tongaat’s R8.5bn debt into equity, with Vision paying R5bn up front and taking on the balance as debt.
Vision’s successful bid for Tongaat beat out rival RGS, which has since filed a court challenge to overturn the business rescue practitioners’ decision.
One of RGS’s allegations is that Vision lacks the funds to purchase the entire debt from the lenders.
“The credit approval that has been obtained by the Vision parties further demonstrates the veracity of both the lender group and Vision’s prior assertions that Vision was able to fulfil all of their payment obligations to the lender group in terms of the Vision business rescue plan,” said business rescue practitioners Metis Strategic Advisors.
The exact amount raised in debt remains unclear, but Vision confirmed to Business Day that they owe about R2bn to the lenders.
In addition to this, the business rescue practitioners said the lender group had agreed to extend the deadline for the remaining payment from the end of March to April 30. This extension would allow time for the credit approval to be drafted and executed.
The practitioners said credit approvals obtained by Vision were sufficient to cover the balance owed to the lender group.
Once Vision acquires the assets, they intend to stabilise them by providing the necessary support, including strategic direction, resources and management attention.
“This marks a pivotal milestone in the successful implementation of the plan and again fortifies the BRPs’ belief that the plan remains capable of implementation. Tongaat and the BRPs recognise that this journey has been arduous for all involved,” the turnaround experts said.
Vision has signed agreements to acquire Tongaat’s operations in SA, Zimbabwe and Botswana subject to regulatory approvals.
Metis said that the business rescue process was marred by several baseless court actions, particularly from minor creditors — alluding to Powertrans — which complicated the rescue process.
The practitioners have come out victorious in all challenges to date.
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.
“Despite these difficulties, the business rescue practitioners extend their gratitude to all stakeholders who have remained committed to and focused on securing a sustainable outcome that safeguards the future of the business, its employees, growers, suppliers and local communities,” Metis said.
It said implementation of the business rescue plan would mark a new chapter for the business, which has a significant economic presence in KwaZulu-Natal, Zimbabwe, Mozambique and Botswana.
Tongaat’s continued survival is critical to bot regional and national economies where it operates. It employs 2,600 people in KwaZulu-Natal alone, supports 25,500 jobs in nearby rural communities and sources sugar from 15,000 small-scale growers.
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