A grower-led consortium of all Tongaat Hulett-supplying growers has announced that they have submitted to the business rescue practitioners an Expression of Interest in acquiring the ailing Tongaat Hulett.
In a statement, the consortium said it planned to buy Tongaat’s South African mills, refinery, animal feeds, and brands of the milling company.
“The offer is made on behalf of growers delivering more than five million tons of sugar cane to the Tongaat Hulett mills in the North Coast of KwaZulu-Natal to ensure the survival of these farming operations, the thousands of livelihoods they support, and socio-economic stability for the greater region,” the group said.
The JSE-listed Tongaat has been in financial distress. Some of its challenges include allegations of mismanagement and being debt-ridden.
The proposal is for the acquisition of assets including the operating mills at Maidstone, Amatikulu and Felixton, the mothballed factory at Darnall, the Huletts Refinery, Voermol animal feeds, and all associated brands and trademarks, the consortium said.
“Agreements would need to be signed expeditiously to enable off-crop maintenance to be completed in time to ensure that the mills are operational for the 2023/24 season,” it said.
According to the consortium, if the acquisition is approved, the assets will be held by an unlisted limited liability company NewCo.
“The proposal is underpinned by a vision of an inclusive, collective investment in the assets of NewCo, which will be held by all Tongaat Hulett-supplying growers in a single investment vehicle with a majority shareholding for supplying black growers.
“This will ensure that NewCo meets the industry’s transformation objectives in the long term. As small-scale growers are generally unable to securitise land, alternate funding methods will need to be explored in order to achieve this vision,” the group said.
Discussions are under way to secure 2023/24 working capital requirements through trade finance arrangements, the group said.
BUSINESS REPORT