Financial support keeps mills working at Tongaat
Financial support for struggling sugar producer Tongaat Hulett has been extended until June, which will allow it to pay employees and the growers who provide it with cane to mill.
The producer said on Friday that final binding equity offers to buy or support the business need to be submitted by May 26. The date for the publication of the business rescue plan, which was postponed to the end of March, has now been extended to May so that the plan can contain more details.
The sugar producer said the plan will “contain information on a transaction and/or structure” on which the creditors will be asked to vote.
“The current strategic equity partner process is also expected to result in final binding offers by May 26.”
This suggests there are potential investors.
Much of the KwaZulu-Natal sugar farming industry relies on Tongaat Hulett’s survival. The company was put into business rescue, a process designed to stabilise and save a business from bankruptcy, because it cannot cope with its R6bn debt.
MUCH OF THE KZN SUGAR-FARMING INDUSTRY RELIES ON TONGAAT HULETT’S SURVIVAL
The group first received short-term funding to keep afloat while in business rescue from the Industrial Development Corporation in December. Tongaat has not disclosed how much money has been received to date and how much more has been promised.
The Companies Act requires practitioners to deliver business rescue plans within 25 days of starting their work, though extensions are not unusual due to the complexity of the restructuring processes.
The sugar producer remains suspended from the JSE because it has not released its 2022 financial statements as required by the bourse’s listing requirements. It said on Friday it will be able to release the statements only after publication and creditor approval of the business rescue plan.
Several former company executives face charges of fraud for allegedly producing false and misleading statements which threatened the existence of the company.