Hope grows for Tongaat Hulett rescue ahead of court showdown

With the Durban High Court set to hear the liquidation application against sugar giant Tongaat Hulett on Wednesday, there is growing optimism that the 134-year-old company will avoid collapse, preserving thousands of jobs and securing the livelihoods of sugarcane growers across KwaZulu-Natal.

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The optimism follows reports that businessman Robert Gumede’s Vision Group and the Industrial Development Corporation (IDC) are close to concluding a deal that could bring an end to the company’s prolonged business rescue saga and pave the way for a sustainable turnaround strategy.

First reported by financial publication Bloomberg, the proposed agreement would see the IDC take a significant equity stake in Tongaat Hulett’s South African sugar operations in exchange for continued financial support, while Vision Group would remain the majority shareholder through its control of the company’s debt position.

The reported breakthrough represents the strongest indication yet that one of South Africa’s most important agricultural businesses could be saved from liquidation.

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The High Court hearing, scheduled to take place over the next two days, was initially expected to determine whether Tongaat Hulett should be wound up after its business rescue process collapsed in February.

However, the prospect of a negotiated settlement between Vision Group and the IDC has altered the mood surrounding the proceedings.

Rather than preparing for the demise of one of the country’s oldest companies, industry stakeholders are increasingly focused on the possibility of a rescue package that would secure the future of the company’s milling operations.

Tongaat Hulett’s financial troubles were triggered by the 2019 accounting scandal, when an audit revealed that former executives had manipulated financial records to inflate profits.

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The scandal wiped about R12 billion off the company’s value.

Since then, stakeholders have feared that the company could fold, leaving an estimated 18 000 sugarcane growers and thousands of employees without an income.

Stakeholders involved in efforts to save Tongaat Hulett over the years include King Misuzulu kaZwelithini, the Department of Trade, Industry and Competition (DTIC), the KwaZulu-Natal provincial government and Parliament’s Portfolio Committee on Trade, Industry and Competition.

During a recent meeting with DTIC senior officials, the portfolio committee warned of “serious economic ramifications” should Tongaat Hulett be allowed to fail.

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The committee said the company’s future was closely linked to broader efforts to preserve jobs, support small-scale growers and ensure the long-term sustainability of the sugar sector.

Given Tongaat Hulett’s contribution to the industry, rural development and jobs, the committee emphasised that the government and the private sector should join hands to save the company.

“Flexibility within the sugar value chain was essential to ensure its long-term sustainability. Therefore, viable diversification options that facilitated inclusive growth and transformation are critical,” committee chairperson Mzwandile Masina said.

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Gumede’s Vision Group, which emerged as the company’s controlling creditor after acquiring Tongaat Hulett’s debt from a consortium of lenders, has maintained that it remains committed to saving the company.

Gumede said rescuing Tongaat Hulett was not only about preserving a corporate entity but also about protecting jobs, sustaining rural communities and safeguarding an industry that remains critical to KwaZulu-Natal’s economy.

The proposed rescue plan is also expected to include efforts to diversify the company’s operations beyond traditional sugar production.

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Among the options under consideration are renewable energy projects that could utilise existing infrastructure at Tongaat Hulett’s milling operations, creating new revenue streams and reducing dependence on a sugar market increasingly threatened by cheap imports.