New plan to save iconic 134-year-old South African company from liquidation

Tycoon-backed Vision Group is in talks with South Africa’s Industrial Development Corporation to take an equity stake in sugar refiner Tongaat Hulett in exchange for additional funding, Vision Group shareholder and consortium member Robert Gumede said in an interview. 

The deal would see additional capital injected into the business and assist the 134-year-old sugar producer’s effort to avoid liquidation of its largest assets in South Africa, Gumede said. 

IDC could also take equity across the group, which includes operations in Zimbabwe, Mozambique and Botswana, as well as in the South African business, he added. 

Vision Group bought R11.7 billion in debt from Tongaat’s lenders, and is in talks with the South African government to assist with certain regulatory changes to ensure the sustainability of the country’s sugar business, said Gumede.

Once the changes are in place, and if an agreement can be reached with the IDC, Vision Group will also put some money into the equity side of the business, he added. 

If a deal is reached, the business’s administrators could consider withdrawing the liquidation filings, said Gumede.

If the IDC decides to take equity in the business, a lot of the risk will be shared, he said, adding that Vision Group’s plan from the start was to share risk with development finance institutions.  

The IDC said it was engaging with stakeholders on Tongaat. “The IDC has acted in good faith and remains guided by its developmental mandate, fiduciary responsibilities, and the protection of public funds,” it said. 

In February, the joint practitioners for business rescue — a type of bankruptcy protection — applied to a South African High Court to discontinue their proceedings and place Tongaat into so-called provisional liquidation.

At the time, Vision Group and the IDC were unable to agree on the funding and refinancing arrangements needed to complete the transaction within the agreed timelines. 

Since then, the parties have been in negotiations, and an outcome on a deal is expected within days as the specifics on the structuring of a deal are worked out, according to the parties involved.

The plan is to try and avoid liquidation if possible, said Gumede, to save thousands of jobs linked to the sugar industry. 

A liquidation is hearing is scheduled to start on June 17. 

Other members of Vision Group include Zimbabwean businessman Rute Moyo, Egyptian entrepreneur Amre Youness, and Nauman Ahmed Khan, the founder of Pakistan’s Almoiz Group.

Tongaat Hulett, founded in 1892, employs thousands of workers and indirectly supports tens of thousands of additional jobs.

It first came under pressure in 2019, when it was hit by a serious accounting scandal. It was officially placed into administration three years later.

Named after the uThongathi River in South Africa’s southeastern KwaZulu-Natal province, Tongaat operates three mills with the capacity to crush more than 4.8 million tons of cane a year, according to its website.