Is Tongaat Hulett still on the road to recovery after three years in business rescue?

Three years almost to the date that Tongaat Hulett went into business rescue, its business practitioners continue to believe that “the company stands a reasonable chance of being rescued”.

This is according to the latest monthly report, which is a condition of business rescue in terms of the Companies Act.

However, the process has not been without its controversies.

Tongaat Hulett and its property development arm, Tongaat Hulett Development, voluntarily entered business rescue in South Africa on October 27, 2022.

This action was preceded by the board determined that the companies were in "financial distress," mostly because of a critical working capital shortfall of around R1.5 billion.

This crisis stemmed from years of high debt, alleged past financial misstatements, and historic mismanagement, exacerbated by the impacts of COVID-19 and the unrest in KwaZulu-Natal in 2021.

In addition, a group of South African banks had, unsurprisingly, refused further credit.

Tongaat Hulett operates four sugar mills in South Africa, located on the KwaZulu-Natal north coast and in the Zululand region.

Its sugar operations in Botswana, Mozambique, and Zimbabwe were not financially distressed and continued trading normally.

The plan, which is now entering its final stages of implementation, was approved by creditors last January with an overwhelming majority of 98.5% voting in favour. As a result, the Vision Group will buy Tongaat out.

Two weeks ago, Business Report reported that the business rescue practitioners successfully opposed further High Court proceedings instituted by RGS Group Holdings (RGS).

RGS, which had raised grievances about the business rescue practitioners, was ordered to pay costs.

RGS, a major Mozambican conglomerate, considered bidding for Tongaat but withdrew due to concerns about the Vision Plan, business rescue practitioners, and alleged fraudulent funding.

Publicly available information indicates that implementing the plan has faced challenges, including missed payment deadlines and legal disputes.

As of the latest updates, the Vision Group remains focused on executing the plan.

The process continues, with new leadership appointed in mid-2025 to support the final transition phase.

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Gavin Dalgleish was appointed as CEO from June.

The company said this “marks a significant step in the final phase of implementing the approved Business Rescue Plan and sets the stage for a seamless transition of Tongaat Hulett’s business, assets, and people to Vision”.

In March, Tongaat said it was prepared for the upcoming 2025/26 sugar season, with all operations set to open and run smoothly as scheduled in April and early May. This follows extensive off-season maintenance and investment to the value of R460 million having been undertaken.

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