Tongaat Hulett has applied for provisional liquidation at the KwaZulu-Natal High Court after the preferred bidder, Vision Group, failed to secure financing from the Industrial Development Corporation (IDC). Industry body SA Canegrowers warned that the development could have far-reaching effects on cane growers, millers and the broader sugar supply chain, according to Business Report.
Business rescue practitioners said the decision followed the collapse of the Business Rescue Plan approved by creditors and shareholders last year after sale agreements with Vision expired. The plan had proposed converting debt into equity, with an asset sale as an alternative if that step did not succeed.
The proposed transaction included refinancing the IDC’s R2.3 billion post-commencement funding under a structure to be taken over by Vision. It also provided for a R517 million escrow account linked to the South African Sugar Association (SASA) and R75 million to be distributed among concurrent creditors.
Vision had been seeking financial backing from the IDC to implement the plan, particularly to refinance existing facilities and settle dues to SASA. However, negotiations broke down after Vision introduced additional funding conditions that were not part of the approved plan. These included requirements beyond the IDC facility and the SASA escrow amount, making the agreement difficult to conclude.
Reports earlier this year indicated that Vision had also requested regulatory concessions from the South African government, including a pause on SASA payments. Meanwhile, relations between Vision, Tongaat and the IDC have worsened in recent weeks. Tongaat confirmed receiving a demand from Vision for about R11.7 billion, which it said posed a serious and immediate threat to the company’s financial stability. With no binding funding agreement reached, the rescue practitioners proceeded with the liquidation filing.
SA Canegrowers cautioned that Tongaat’s possible closure presents a major risk to the country’s sugar sector and the nearly one million livelihoods connected to it. The group noted that Tongaat’s milling, refining and cane-growing activities support rural economies in KwaZulu-Natal and Mpumalanga, and any disruption could weaken income prospects for thousands of growers.
“If operations are not maintained, the impact will extend well beyond a single company,” said Thomas Funke, adding that growers, workers, transporters and related industries could face severe instability.
Liquidation would also stop the company from selling its existing refined sugar stocks to manufacturers and retailers, immediately cutting off an important source of operating cash.
Higgins Mdluli urged authorities and business rescue practitioners to prioritise keeping mills running and safeguarding grower earnings regardless of who ultimately takes ownership. He added that the outcome could affect all of South Africa’s roughly 27,000 small-scale and 1,100 large-scale cane growers.
