Hail Mary to save 134-year-old South African sugar producer from liquidation

Tongaat Hulett’s business rescue practitioners (BRPs) confirmed today that a binding agreement has been reached that could save the sugar producer from liquidation.

With Tongaat’s liquidation hearing scheduled to be heard on 17 June at 09:50, this Hail Mary is coming at the last minute.

In a press release sent on Wednesday, 17 June, Tongaat’s BRPs said the Industrial Development Corporation of South Africa (IDC) and the Vision Group of companies have concluded a binding agreement.

This deal, they said, provides a pathway to preserve Tongaat’s business rescue, maintain trading operations, and support implementation of the approved business rescue plan. 

“The agreement will see the IDC become a significant shareholder in Vision operating companies across South Africa, Zimbabwe, Mozambique and Botswana,” they said,

At the same time, the deal will extend Tongaat’s post-commencement finance (PCF) support to the end of September 2026. 

The agreement will further provide a basis for preserving an estimated 250,000 jobs across the sugar industry value chain and for concluding the steps required for Tongaat to exit business rescue.

The IDC and Vision’s agreement comes after years of the parties failing to negotiate an agreement that could save Tongaat from liquidation.

The BRPs’ decision to file for provisional liquidation followed negotiations between the IDC and Vision having broken down, with the practitioners saying the business rescue process lacked the liquidity and implementability to be completed in full.

Thus, the BRPs filed for provisional liquidation earlier this year, with the hearing originally scheduled for 16 April.

However, at the last minute, the IDC and Tongaat’s BRPs reached a deal to extend the company’s PCF support by R200 million.

This gave interested parties more time to negotiate a plan to save Tongaat from liquidation before the postponed hearing date of 17 June.

“The parties have chosen instead to work together to keep Tongaat operating and to protect the value it holds for its employees, growers, suppliers, lenders, and the many communities across the region that depend on it,” the BRPs said about the latest deal. 

“On the strength of this historic agreement, the BRPs will take the steps necessary to withdraw the liquidation application today in front of the judge.”

Under its agreement with Vision, the IDC will extend its PCF support to enable Tongaat Hulett to continue trading while the transaction is implemented. 

The parties have also agreed to restructure the IDC’s PCF into equity at the appropriate level, supporting a more sustainable capital structure on emergence from business rescue.

Vision will provide the funding required to settle and address creditor claims, including the company’s obligations to the South African Sugar Association. 

The parties will also conclude new sale agreements for the transfer of Tongaat’s South African operations, together with its interests in its subsidiaries in Zimbabwe, Botswana and Mozambique, to Vision.

“The parties have committed to work together in good faith and with urgency to bring the transaction to completion,” the BRPs said. 

“Their shared objective is to stabilise the business, support the broader sugar value chain, and position the operations for long-term sustainability and recovery.”