End of the Road for Tongaat Hulett as Business Rescue Fails

By Busness Reporter

One of Southern Africa’s oldest and most significant agro-industrial companies, Tongaat Hulett, is teetering on the brink of provisional liquidation after its long-running business rescue process collapsed, administrators confirmed this week.

The 134-year-old South African sugar and agri-processing giant, which also owns Hippo Valley Estates and Triangle Limited in Zimbabwe — has now been placed on a path that could see it formally wound up, following the withdrawal of its last remaining prospective buyer.

Business rescue practitioners confirmed on Thursday that they have applied to court for provisional liquidation after concluding that there is “no longer a reasonable prospect of rescuing the business”, effectively extinguishing hopes that the group could be saved as a going concern.

Tongaat Hulett was placed under business rescue in October 2022 after years of mounting financial distress, ballooning debt, and governance failures. Since then, creditors, employees and growers have endured a prolonged period of uncertainty as various rescue options were explored.

The company’s most recent survival strategy hinged on a business rescue plan approved by creditors in January 2024. Central to that plan was the acquisition of Tongaat Hulett’s operating assets and certain regional investments by a prospective buyer, Vision.

The plan offered two possible routes, a debt-to-equity conversion, which would have significantly diluted existing shareholders but stabilised the company’s balance sheet, or an asset sale, which would allow Vision to acquire key operations while providing some recovery for creditors.

Shareholders ultimately rejected the debt-to-equity conversion, triggering the fallback asset sale mechanism. However, that route has now collapsed after Vision declined to extend sale agreements that had lapsed due to unmet conditions.

According to the rescue practitioners, the asset sale failed after the company was unable to satisfy a series of stringent financial conditions attached to the transaction. These included, the refinancing of a R23 billion post-commencement funding facility provided by the Industrial Development Corporation, the provision of R517 million into an escrow account for the South African Sugar Association, pending the outcome of litigation; and the availability of R75 million for distribution to concurrent creditors.

With these conditions unmet and no further extensions forthcoming, Vision withdrew, leaving the business rescue practitioners with little choice but to move toward liquidation.

The collapse of the rescue process places thousands of jobs at risk across Southern Africa, particularly in South Africa’s KwaZulu-Natal province, where Tongaat Hulett has long been a major employer and economic anchor.

Beyond employees, the potential liquidation threatens the livelihoods of sugarcane growers, transporters, suppliers and downstream businesses that rely on the group’s operations. Creditors now face the prospect of substantial losses, while communities built around Tongaat Hulett’s mills and estates brace for economic shock.

In Zimbabwe, the situation is being closely watched due to Tongaat Hulett’s controlling interests in Hippo Valley and Triangle Limited, which are central to the country’s sugar production and a major source of employment in the Lowveld. While the Zimbabwean operations are structured as separate listed entities, uncertainty at group level inevitably raises concerns among workers, farmers and investors.

Tongaat Hulett’s collapse follows years of financial turmoil. In 2019, the company was forced to restate several years of its financial results after uncovering an accounting scandal that severely damaged its credibility with investors and lenders.

Already burdened by heavy debt and declining operational performance, the group struggled to regain stability, eventually succumbing to liquidity pressures that led to its entry into business rescue three years later.

Since then, its shares have remained suspended from trading on the Johannesburg Stock Exchange, where the company was once a blue-chip agricultural stock.

In a notice published on the JSE’s Sens platform, Tongaat Hulett’s business rescue practitioners and management acknowledged the gravity of the situation and the uncertainty facing stakeholders.

They expressed appreciation for “the resilience and support demonstrated during this challenging period” by employees, growers, suppliers, customers, creditors and affected communities, while warning that difficult decisions now lie ahead.

Further communication is expected as the court process unfolds and next steps are assessed in line with the Companies Act.

Tongaat Hulett’s operations span sugar production, starch manufacturing and property development interests across Southern Africa. Whether these assets will be sold piecemeal, preserved under new ownership, or dismantled through liquidation proceedings will depend on the outcome of the court process in the coming weeks.

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