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Trade, industry & competition minister Parks Tau says his department believes embattled Tongaat Hulett can be stabilised and restructured without being placed in liquidation.
This as the sugar milling and refining company languishes under the threat of collapse amid a surge of cheap sugar imports — about 163,000 tonnes of the sweet stuff — flooding the local market.
“The department, together with other organs of state, will oppose the liquidation of Tongaat Hulett and continue to support all lawful efforts aimed at finding a viable and durable resolution,” the minister said in a statement on Friday.
On Tuesday, Tau initiated an amendment to the constitution of the South African Sugar Association to empower it to determine the local market’s sugar requirements, carry-on stocks and annual export quantities.
The department, together with other organs of state, will oppose the liquidation of Tongaat Hulett and continue to support all lawful efforts aimed at finding a viable and durable resolution.
— Parks Tau, trade, industry & competition minister
Earlier this month, the business rescue practitioners (BRPs) approached the KwaZulu-Natal high court to apply for provisional liquidation.
The company did so after the lapse of a sale agreement with Vision Sugar and a failure to finalise funding arrangements with the Industrial Development Corporation (IDC).
Tau said the government would continue talking to the IDC, labour, growers, financiers, investors and affected communities to explore solutions to ensure the company’s survival.
SA Canegrowers said the situation at Tongaat Hulett remained fluid, and every effort was being made to ensure the company’s continued operation, in whatever form that ultimately takes.
“The sale of Tongaat Hulett’s South African business to Vision reached a critical point last week when funding negotiations involving the IDC failed to conclude successfully. As a result, the sale agreement lapsed over the weekend.
“This does not mean that Vision is no longer a willing buyer, but that a critical deadline in the business rescue process was missed. As a result, the business rescue practitioners — needing certainty of a valid agreement with a willing buyer — prepared to file for provisional liquidation in February.”
The statement said the critical economic and social importance of continuing Tongaat Hulett’s operations meant high-level interventions began immediately to avoid possible liquidation.
“The government, including the department of trade, industry & competition, is now directly involved. There is a clear understanding that the consequences of failure would extend far beyond a single company.
“For now, the liquidation filing has been withheld to allow space for these urgent engagements to continue. It is important for growers to understand several key realities... [among them that] there is no intention by any party — including the BRPs, creditors, the government or industry bodies — to see the business simply shut its doors and walk away.”
The government, including the department of trade, industry & competition, is now directly involved. There is a clear understanding that the consequences of failure would extend far beyond a single company.
— SA Canegrowers
The South African Farmers Development Association (Safda) said it hoped the business rescue process would turn around the company’s fortunes.
“Of the 25,653 small-scale farmers in the sugar industry, about 60% — or 15,446 — are found in the Tongaat Hulett catchment, supplying sugarcane to its three mills in Tongaat, Gingindlovu and Empangeni.”
Safda said more than 1-million tonnes of sugarcane from the season ending March 31 this year were at stake, generating about R845.7m in revenue and benefiting households, local enterprises and farm workers.
Business Times
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