Zulu Royal Chancellor champions black farmers as Tongaat Hulett collapses
The Zulu Royal Chancellor Inkosi Malusi Zondi says the collapse of Tongaat Hulett is a double blow for black and emerging sugarcane farmers who are owed by the company for their supplies and had been waiting for years hoping the business rescue would succeed.
Image: SIBONELO NGCOBO Independent Newspapers
The Zulu Royal Chancellor, Inkosi Malusi Zondi, has launched a high-stakes intervention to protect black farmers and labourers following the final collapse and pending liquidation of sugar giant Tongaat Hulett.
The announcement marks the end of a protracted and ultimately failed business rescue attempt for one of the SADC region’s most critical economic pillars. For the emerging sugarcane farmers of KwaZulu-Natal, the move signals a "double blow": they must now navigate a liquidation process estimated to last three years to recover debts already years in arrears.
In a stinging rebuke of traditional insolvency protocols, Inkosi Zondi vowed to challenge the hierarchy of payments. He asserted that small-scale growers and workers should not be sidelined while financial institutions with "enough financial reserves" wait in line.
"As the Zulu Royal Chancellor entrusted to improve the welfare of Zulu people, I wish to assure farmers that I will fight the battle on their behalf to the bitter end," Zondi stated.
"I will ensure that they are second in line to be paid after SARS."
The Zulu Royal Chancellor Inkosi Malusi Zondi has vowed to fight for black sugarcane farmers following the proposed liquidation of sugarcane giant Tongaat Hulett. SA Canegrowers says the proposed liquidation could destabilise the entire South African sugarcane industry.
Image: SIMPHIWE MBOKAZI Independent Newspapers
The Chancellor argued that while banks can withstand the "liquidation shock," small businesses operating on month-to-month budgets face immediate ruin if they are relegated to the back of the queue.
The collapse threatens thousands of jobs in a province already grappling with high unemployment. Zondi emphasized that the workers whose "sweat" built the company must be prioritized.
"It cannot be acceptable that a company built on their sweat pays them last when it undergoes challenges," he said, adding that in an ideal economic model, workers would be the first to receive payouts.
Despite the grim outlook, Zondi pointed to a strategic partnership with Vision Sugar as a primary source of leverage. Vision Sugar recently acquired Tongaat Hulett’s R11.7 billion debt book and has reportedly committed to working with the Chancellor to shield black farmers and employees from further disadvantage.
"It is commendable that Vision Sugar is on the same page with the rest of us," Zondi noted. "I will take it from there and stand for our people during the liquidation process."
The liquidation is expected to be one of the most complex in South African corporate history, with the Royal Chancellor's office now positioned as a central watchdog for the region's agrarian economy.
Tongaat Hulett filed for provisional liquidation at the KwaZulu-Natal High Court after winning bidder, Vision Group, failed to agree financing terms with the Industrial Development Corporation (IDC), with SA Canegrowers saying the folding up of the agro-processing giant will affect cane growers, millers and the entire sugar industry value chain.
Business rescue practitioners in Tongaat Hulett on Thursday said the company had now filed for provisional liquidation, saying the Business Rescue Plan adopted by shareholders, creditors and other stakeholders last year was “no longer being implementable as a result of the lapsing of the Sale Agreements” with Vision.
“The adopted Business Rescue Plan, proposed by Vision and approved by creditors in January 2024, was premised on a debt to equity exchange, failing which an asset sale transaction,” said the business rescue practitioners in a statement.
Under the transaction, Vision and Tongaat had agreed on the refinancing of the Industrial Development Corporation’s post-commencement funding facility of R2.3 billion into a structure assumed by Vision, funding of an escrow account in the amount of R517 million in respect of the South African Sugar Association (SASA) and provision of R75m for distribution to concurrent creditors.
SA Canegrowers said on Thursday that the “liquidation of Tongaat Hulett is a profound risk to the entire South African sugar sector and the million livelihoods that it supports” as it threatens “the earning potential of thousands of small-scale and large-scale growers” across KwaZulu-Natal and Mpumalanga.
Moreover, Tongaat’s sugar mills, refining facility and cane-growing operations are an economic anchor for rural regions in the two provinces.
“If this operational continuity is not secured, the consequences will extend far beyond one company. The entire South African sugar value chain, starting with growers and flowing through to workers, transporters and downstream industries, will be severely destabilised,” said Dr Thomas Funke, CEO of SA Canegrowers.
Liquidation also means that Tongaat will be prevented from selling their existing stock of refined sugar to manufacturers and retailers, which immediately stops critical cash flow to the company’s operations.
“Ensuring continuity of milling operations at Tongaat and protecting grower income must be an urgent priority for the government and the business rescue practitioners of Tongaat, irrespective of the eventual ownership outcome,” said Higgins Mdluli, chairman of SA Canegrowers.