Tongaat Hulett: Agreement made on short-term payments
THE members of the South African Cane Growers’ have accepted a proposal by the Tongaat Hulett Limited Business Rescue Practitioners that ensures payment of money owed to growers for cane delivered to Tongaat Hulett mills.
SA Cane Growers chairperson Andrew Russell said the agreement, which covers payments still outstanding to growers and industry service providers as well as the payments that will become due at the end of November for the cane delivered in October 2022, is a critical step to protecting the thousands of livelihoods at stake on the north coast of Kwazulu-natal.
Russell said under the agreement, outstanding October payments to growers for cane delivered in September will be made by tomorrow.
“Payments due to small-scale growers at the end of November 2022 for sugar cane delivered in October will be paid in full, while suitable terms have been agreed for staggered payments to commercial growers. Most commercial growers have already received the October payments,” he said.
Russell added that the commercial growers agreed to waive their claim for interest due on delayed payments in recognition of the difficult position
Tongaat Hulett finds itself in and in the interests of other affected stakeholders.
“Growers had required payment prior to any resumption of supplies to Tongaat Hulett. Once the outstanding October payments are affected, growers will resume deliveries to the mills in Felixton, Maidstone, and Amatikulu, enabling Tongaat Hulett to resume operations at its mills and refinery and to, once again, generate cash flow,” he said.
He said the crisis for the industry was far from over, and it remained to be seen whether Tongaat Hulett would be able to secure the funding needed to complete the off-crop maintenance that is required for its mills to operate next season.
Russell further said the risk remains that Tongaat Hulett will not emerge from business rescue, once again plunging the industry into a crisis.
He said the demise of Tongaat Hulett would undo years of work under the Sugar Cane Value Chain Master plan, reversing efforts to shield the local market from cheap imports and protect the one million livelihoods that depend on the industry.
Tongaat Hulett, which owns vast land in the province, is under business rescue following years of poor financial results due to corruption purportedly committed by former executives who allegedly “cooked” the books to earn performance bonuses.
Seven executives, including former CEO Peter Staude, were charged with fraud and released on bail at the Durban Commercial Court in February. They allegedly colluded with external auditors to misrepresent the financial statements for their personal gain.
While the company has been trying to bounce back, the situation has not improved. It missed an October 31 deadline to pay about R400 million for deliveries made in September after the company failed to secure the funding. This week, it managed to pay only small-scale farmers.