New group steps in to save 134-year-old South African company from liquidation

A grower-led group, called GrowerCo, has been established with the aim of securing funding for the embattled Tongaat Hulett and preventing its impending liquidation.

Tongaat is a critical employer in South Africa’s sugar industry, supporting an estimated 40,000 direct jobs, and its liquidation would deal a hard blow to the already struggling sector.

To prevent this, GrowerCo has been established with a view to securing the funding necessary to keep Tongaat’s mills and refinery operational.

GrowerCo’s proposal is built around the long-term sustainability of Tongaat and includes small- and large-scale growers as equity partners. 

It is focused on maintaining milling operations, safeguarding jobs, and preserving economic activity across rural KwaZulu-Natal. 

“The 130-year-old Tongaat Hulett supports between 35,000 and 40,000 direct jobs at farm level and at its mills and its refinery, making it an economic anchor for entire rural communities,” the group said.

In addition, more than 17,500 of South Africa’s 28,000 sugarcane growers supply Tongaat, the majority of whom are small-scale growers. 

About 77% of the sugar industry’s revenue stems from KwaZulu-Natal, where Tongaat is also a dominant driver of economic activity. 

“The future of KwaZulu-Natal is intricately tied to the future of Tongaat Hulett,” said Pratish Sharma, a grower who supplies Tongaat Hulett’s Maidstone mill. 

“The long-term economic and societal consequences of its liquidation would far exceed the liabilities on the company’s balance sheet.”

Nicholas Ngobe, a grower supplying Tongaat’s Amatikulu mill, said GrowerCo “makes sense” because it puts Tongaat Hulett under the ownership of people with a long-term commitment to the sugar industry in South Africa.

“Small-scale growers are equity partners in GrowerCo and will earn returns not only on their sugarcane but will share in equity growth over the long run,” said Ngobe. 

GrowerCo estimates that debtors would realise R3 billion to R4.5 billion for Tongaat if it is sold as a going concern, whereas value recovery in liquidation would be as low as R1 billion to R1.5 billion.

GrowerCo’s proposal comes as Tongaat’s liquidation hearing is less than a month away, originally having been scheduled for 16 April.

However, on the day the hearing was set to start, a deal was reached between Tongaat’s business rescue practitioners and the Industrial Development Corporation.

This deal extended Tongaat’s Post-Commencement Funding (PCF) to 30 June 2026 and increased it from R2.3 billion to R2.5 billion.

When the deal was announced, Tongaat’s business rescue practitioners said this would provide the necessary liquidity to support the company’s ongoing operations pending the finalisation of the transaction.

With the R200 million PCF extension confirmed, the KwaZulu-Natal High Court granted an adjournment of Tongaat’s provisional liquidation application, with the matter now set to be heard on 17 and 18 June.