R116m hope for Magwa, Majola tea estates

THE bankrupt Majola tea estate near Port St Johns was yesterday liquidated in the Grahamstown High Court, marking a quiet end to an erratic tea production era.

But it is hoped the final winding up of the ill-fated and heavily subsidised estate may also mark a new beginning if things go to plan.

According to court papers, the final winding up of the dilapidated tea estate – which has been bankrupt and without any source of income for many years – is intended to pave the way for its rehabilitation.

Sister tea estate Magwa near Lusikisiki, which goes under the name Magwa Enterprises Tea Soc Company (MET), was placed under business rescue in February last year.

The government has subsequently committed a R116-million rescue package to, once again, attempt to rehabilitate the ill-fated project.

The multimillion-rand package was intended for both Magwa and Majola.

But Magwa business rescue practitioner Garth Voigt said Majola could not be put into business rescue along with Magwa as its shares were held by the Majola Workers’ Trust rather than by the Eastern Cape Development Corporation (ECDC).

The ECDC had initiated Magwa’s business rescue proceedings but, as it had no say in Majola, could not do the same for it.

Now that Majola has been liquidated, the intention is for the province to buy it back at a nominal amount aiming to consolidating it with the MET.

“The business rescue plan currently being formulated for MET contemplates the consolidation of the two businesses, which would achieve certain objectives, including economies of scale and the imposition of one management structure,” said Voigt in an affidavit.

He said this was supported by a majority of the Majola Workers’ Trust.

Meanwhile, Magwa Tea rescue until late November.

Voigt’s turnaround strategy includes a plan for the tea estates to diversify into other produce, including macadamia nuts.

The liquidation of the tea remains in business estate was not opposed.