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By Akhona Matshoba

Moneyweb: Journalist


Tongaat Hulett suffers legal blow in dispute over R900m debt

Tongaat and Gledhow Sugar Company – a KwaZulu-Natal-based sugar firm – owe the Sasa R1.5 billion in industry-related levies.


The business rescue practitioners (BRPs) for financially troubled Tongaat Hulett say they are considering their next steps in the ongoing dispute over the sugar producer’s liability to settle industry levies owed to the South African Sugar Association (Sasa).

Judgment was handed down at the KwaZulu-Natal local division of the Durban High Court on Monday, affirming that the company was indeed liable to settle a debt of approximately R900 million with the industry body and that the rescue process does not – as Tongaat’s BRPs have previously argued – take precedence over the industry.

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In an initial response to questions probing the rescuer’s next steps following Monday’s judgment, BRPs – Metis Strategic Advisors – said, “We are studying the judgment and its implications in detail and will consider what steps to take thereafter”.

Tongaat and Gledhow Sugar Company – a KwaZulu-Natal-based sugar firm – owe the Sasa R1.5 billion in industry-related levies.

Tongaat Hulett entered the rescue process in 2022 after finding itself in financial trouble, while Gledhow began the process in March 2023. The two firms have been at odds with the industry since failing to settle their debts with the Sasa at the end of March this year.

Tongaat’s BRPs had previously challenged their obligation to the industry, arguing that the rescue process took precedence over its arrangements. However, the latest developments out of the courts suggest otherwise.

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“What this means practically is that the business rescue practitioners (BRPs) at Tongaat Hulett and Gledhow cannot suspend the obligation to pay more than R1.5 billion that was due to Sasa at the end of March 2023, which was not paid at the time due to the BRP’s contention that the business rescue process took precedence over industry arrangements,” the SA Canegrowers Association said in a statement on Tuesday.

Industry reaction

The Durban High Court dismissed Tongaat’s business rescue practitioners’ bid with costs.

“The substantive basis for the dismissal of the application is a welcome outcome for the ongoing sustainability of the sugar industry. This judgment brings the industry one step closer to a resolution of this critical industry matter. It does not, however, put the matter to bed,” the association added.

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SA Canegrowers had previously argued that the two firms’ non-payment would result in dire consequences for the entire industry, affecting the livelihoods of small-scale growers the most.

SA Canegrowers also noted that it will study the judgment and its implications for the industry. However, it also expressed hopes that Tongaat’s BRPs will revise their rescue plans to accommodate this latest development.

“It is our hope that the plans will be revised to accommodate the payment of the industry obligations upheld by the high court. Failure to do so will needlessly prolong what has already been a protracted and costly process for the entire industry and will continue to put thousands of livelihoods at risk.”

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Tongaat’s BRPs released their business rescue plans on 1 December, noting they would be meeting with creditors this week. They put forward proposals from The RGS Group – a Mozambican conglomerate – and from a grouping referred to as the Vision Parties – which includes Terris Sugar, Guma, Remoggo and Almoiz.

Those plans now hang in the balance as the BRPs try to find a way forward.

This article was republished from Moneyweb. Read the original here

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