Mozambican investment group RGS Holdings has submitted an urgent application in the Durban High Court to interdict and set aside the implementation of embattled sugar producer Tongaat Hulett’s business rescue plan, which involves the sale of the group’s assets to the Vision consortium.

RGS is also seeking the disclosure of a range of information from Tongaat’s business rescue practitioners (BRPs) and the Vision consortium, which it will unpack in a court hearing scheduled for November 28.  

Tongaat entered into voluntary business rescue in October 2022, with the Vision business rescue plan having been announced in January this year. The plan involves a debt-to-equity conversion proposal.  

Several former Tongaat executives are alleged to have committed fraud involving more than R3.5-billion, which put the group in dire financial straits. 

The Vision consortium is made up of businesspeople Robert Gumede and Rute Moyo and includes with Mauritius-registered companies Terris, Guma and Remoggoa, as well as Almoiz, which is registered in the United Arab Emirates.

Tongaat can only exit business rescue once the plan has been substantially implemented or if it is no longer financially distressed. Vision plans to buy out R8.5-billion of lender claims against Tongaat and convert R4.9-billion of this to equity, resulting in a 97% shareholding in Tongaat.  

RGS had also been bidding to take over Tongaat alongside Vision, having published a separate business rescue plan for the company which had subsequently been withdrawn. RGS believes the process was rigged in favour of the Vision consortium.

RGS alleges that the BRPs have not conducted themselves appropriately in accordance with their duties and obligations, nor in the interest of Tongaat and its stakeholders.

It also claims that the business rescue plan of Vision has lapsed given that it has proven incapable of implementation within a reasonable time.

RGS’s offer involved R4.4-billion being directly injected into Tongaat and the group retaining its JSE listing and labour force.

RGS says Vision failed to raise the full funds necessary for the transaction, but despite this, the BRPs continued to push ahead with the Vision plan.

The deal has overall been mired with claims of lacking transparency and proper information to creditors and stakeholders, with RGS also stating this in its application to the High Court.

Tongaat said in a statement on November 8 that RSG's litigation is both time- and cost-consuming, which is not in the interest of any Tongaat stakeholders.

Tongaat, the BRPs and their legal advisors are currently working through this latest application of RSG and intend to oppose it if advised to do so.

The group reiterated that RSG's business rescue plan was published alongside Vision's plan and that the BRPs were ready to present both offers to creditors for consideration at a meeting held on January 10, however, RSG elected to withdraw from the process at the eleventh hour and, accordingly, the only business rescue plan available to be put to creditors for vote was the Vision one.

The Vision business rescue plan for Tongaat was then adopted by the majority of creditors.

Despite RSG's contentions to the contrary in its latest High Court application, the Vision consortium's current plan remains capable of being implemented and is binding on Tongaat and its creditors, Tongaat stated.

The group reaffirmed that the lender group, Vision, Idnustrial Development Corporation and the BRPs remain committed to implementing the business rescue plan as expeditiously as circumstances permit.