Tongaat Hulett Ltd., a 134-year-old South African sugar producer and agri-processing business focused on sugarcane and maize feedstocks, is once again nearing collapse as administrators prepare to place the company into bankruptcy, according to people familiar with the matter.
The company’s strategic partners, Vision Group and the Industrial Development Corp., have been negotiating funding but missed key deadlines, Bloomberg reported.
A financing agreement could still be reached even if Tongaat enters liquidation, though any deal would have to follow due process and secure approval from the IDC’s board.
“It’s most unfortunate that the Vision business rescue plan has been allowed to fail,” Vision Group member Robert Gumede said in response to questions. “However, Vision shareholders remain committed to saving Tongaat South Africa.”
Debt overhang
Vision Group had agreed to acquire 11.7 billion rand ($735 million) of Tongaat’s debt and would remain owed the funds even if the company is liquidated, the people said.
The rescue proposal centred on a debt-to-equity restructuring aimed at preventing liquidation, with the debt acquired from Investec, Absa Group Ltd. and Nedbank Group Ltd.
Tongaat employs thousands of workers and supports tens of thousands more indirectly. The company first ran into serious trouble in 2019 after a major accounting scandal and was formally placed into administration three years later.
Founded in 1892 and named after the uThongathi River in KwaZulu-Natal, Tongaat operates three mills capable of crushing more than 4.8 million tons of cane annually.
It has operations, including sugar mills, packing, and distribution, in 6 countries across Southern Africa: South Africa, Zimbabwe, Mozambique, Botswana, Namibia, and Eswatini (formerly Swaziland)
