Ailing sugar manufacturer Tongaat has been saved from financial distress by consortium, Vision, led by businessman of Gijima-fame, Robert Gumede. The consortium is said to have bought the existing debt of about R8 billion, of which R4. 1 billion will be turned into equity.
Over 98% of Tongaat’s creditors were in favour of Vision’s business rescue plan which will see it having a 97.3 % stake in the company. The company is hopeful that this will see many jobs being retained and diversifying into other sectors.
Tongaat Hulett is one of the key strategic assets in the SADC Region, employing some 40 000 small-scale cane growers as well as numerous players across the sugar cane industry, all of whom are the biggest winners with this result.
“It gives certainty because we know that Tongaat directly or indirectly has got almost 25 000 employees or people that rely on them and we have got these sugar cane growers as well who have been relying on Tongaat so that brings some form of certainty,” says Makwe Masilela of Makwe Fund Managers.
Experts are hopeful that the company will soon enough be solvent and will trade again on the JSE.
“I think a lot of work needs to be done because this is a company that was literally bankrupt or insolvent. Bankrupt means that liabilities exceed assets. This is just a company that had no money but still I think we have to see the terms of the deal but I am sure it’s in Roberts plans to get it relisted, perhaps to even raise capital once they are on their feet,” says David Shapiro, Investment Strategist: Sasfin Securities.
With Tongaat operating in the sugar, animal feed and the property sphere, with this deal they will soon set their sights onto other sectors.
“Definitely and I think one of the things they are looking at more on the energy part of things, ethanol. So, they are looking to do that as well will help them diversify their revenue streams,” Masilela added.
The Business Rescue Practitioners will now proceed with the implementation of the adopted plan. Tongaat can only exit business rescue once the plan has been substantially implemented which could take several months or alternatively if it is no longer financially distressed.
The decision to terminate business rescue lies with the BRPs or alternatively the High Court on application.
Source: SABC
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