The business rescue practitioners (BRPs) of sugar producer Tongaat Hulett have reported that, after exhausting all reasonable endeavours, they have applied to the High Court of South Africa KwaZulu-Natal division for an order discontinuing the company’s business rescue proceedings and placing Tongaat into provisional liquidation.

The decision was taken as the business rescue plan was no longer implementable as a result of the lapsing of the sale agreements with Vision Group.

“This is an outcome the BRPs did everything in their power to avoid, fully aware of the profound impact on employees, growers, suppliers, creditors, clients and the many families and communities whose livelihoods depend on the company.

“However, the circumstances that ultimately necessitated this application arose beyond the control of the BRPs and within the constraints of their statutory duties under Chapter 6 of the Companies Act,” Tongaat says in a media release.

Tongaat entered business rescue in October 2022 following severe historic accounting irregularities, financial misstatements and governance failures under former senior management.

Vision Group acquired the lender group claims in May 2025.

From that point onward, Tongaat says, the implementation of the business rescue plan was principally dependent on the refinancing of the post-commencement funding (PCF) facility and satisfaction in relation to the South African Sugar Association (SASA) escrow amount.

Tongaat says Vision chose to seek funding from the Industrial Development Corporation of South Africa (IDC) to fulfil these obligations, noting that this process remained ongoing for several months.

Despite repeated engagements, Tongaat says Vision and the IDC were unable to conclude binding funding arrangements.

“During this period, Vision introduced new demands and conditions that were never contemplated, nor capable of accommodation, under the adopted business rescue plan,” the company posits.

These included funding requirements beyond the financing of the PCF facility and the SASA escrow amount.

Tongaat argues that these demands materially complicated and delayed discussions between Vision and the IDC, as well as the implementation of the plan at a time when Tongaat’s liquidity position was under severe pressure.

As the sale agreements approached expiry, the company says the IDC and its advisers were actively engaged in finalising feedback on funding proposals.

The BRPs requested a short extension to allow the IDC to conclude its processes and to consider the proposals made by Vision to the IDC.

Tongaat says Vision considered the request and indicated that it was prepared to grant an extension, subject to the imposition of new, material conditions.

The company explains that the BRPs determined that these conditions were not acceptable, as their fulfilment would have run counter to the agreed methodology for implementing the approved business rescue plan, exposed Tongaat to significant commercial risk, and potentially placed Tongaat in breach of its contractual undertakings to third parties.

Further, Tongaat adds that broader market conditions deteriorated significantly as well, including a sharp decline in domestic sugar sales as cheap imported sugar continued to enter the market in record volumes, undermining local demand and revenue.

These external factors further constrained cash generation and compounded the company’s liquidity challenges.

“As a consequence of Vision’s refusal to unconditionally extend the closing date, and the non-fulfilment of the Plan’s conditions, the sale of business agreements lapsed on February 7 and, as a result, the business rescue plan has become unimplementable,” says Tongaat.

The company says it has subsequently received a letter of demand from Vision for about R11.7-billion, stated to be immediately due and payable.

Tongaat says this claim has profound implications for its solvency and constitutes a material and immediate threat to the company’s continued existence.

“In the considered view of the BRPs, and based on objective grounds, there is no longer a reasonable prospect of implementing the adopted business rescue plan or rescuing Tongaat as a going concern.

“This arises in material part from Vision and IDC not reaching agreement on binding funding arrangements and Vision’s continued pursuit of relief and write-offs, which prevented final IDC approval.”

In these circumstances, and in compliance with their obligations under the Companies Act, the BRPs have no alternative but to apply to discontinue the business rescue proceedings and place Tongaat into provisional liquidation, says Tongaat.

If a provisional liquidation order is granted by the High Court, the company explains that the Master of the High Court will appoint a provisional liquidator, who will assume responsibility for overseeing the winding-up process, engaging with creditors, securing the company’s assets, and guiding the submission and adjudication of creditor claims.

Tongaat says the BRPs will cooperate fully with the appointed liquidator to ensure an orderly transition and continued transparency for all stakeholders.

“It is important to note that this development relates to Tongaat Hulett in South Africa. It does not affect the ongoing operations of the company’s businesses in Zimbabwe, Mozambique, or Botswana, which continue to trade and operate in the ordinary course under their respective structures,” the company clarifies.

Further communication will be issued once the court has ruled on the application and next steps have been confirmed.

“The BRPs, along with the Tongaat senior leadership team, recognise that this development brings significant uncertainty and distress for employees, creditors, suppliers and surrounding communities, and remain committed to providing clear, timely updates as the process unfolds,” says Tongaat.

In response to Tongaat’s statement, Vision says it remains steadfast in its commitment to the survival and long-term viability of Tongaat.

“The BRP’s filing for liquidation today is a disappointing outcome which unfortunately introduces more uncertainty into an already fragile regional sugar ecosystem that is reeling from delayed industry reforms especially tariffs,” says Vision in a separate release.

As the lead secured lender with a substantial exposure to Tongaat, under the proposed provisional liquidation, Vision says it will now focus its attention to securing control over the assets that had been pledged as security, and to protecting the integrity of the business, its loyal workforce, its extensive network of growers and suppliers and the communities that have hosted the business for over 130 years. 

“The filing today follows the failure of the Business Rescue process to effectively stabilise Tongaat operations and maximise a turnaround, leaving liquidation as the necessary legal mechanism to allow secured creditors like Vision to take direct control of the assets and initiate a comprehensive recovery plan of the South African sugar business.

“Our primary objective is the preservation of the sheer magnitude of livelihoods tied to this over 130-year-old heritage business.”

Vision says the impact of a total collapse of Tongaat South African operations would be “catastrophic” for the regional economy, particularly for the 250 000 jobs supported by the cane growing sector.

“Vision’s quest is to save these jobs and ensure that the 16 000 canegrower enterprises who form the backbone of the industry are not left more vulnerable.”

Since the approval of the Vision business rescue plan over two years ago, Vision says it has invested billions of rands to acquire the lender group claims, assisted management to turn around Tongaat plants to be the best performing entity in the industry, sought new clients, assisted in recruitment of  key leadership – sometimes at its cost, engaged government through the Minister of Trade, Industry and Competition for industry reforms and to save jobs and the sugar industry.

“Despite these best efforts, with the failure of the business rescue plan, the BRPs, led by Trevor Murgatroyd, had to act in the best interest of the creditors.”

While the legal action has led to provisional liquidation, Vision says this process provides the most transparent path for government and other key stakeholders to engage in a structured rehabilitation of the assets without the BRP and their advisers who were appointed in October 2022.

Vision says it will engage with regulators, employees, labour unions, canegrowers, SASA, suppliers, clients, traditional leaders in KwaZulu-Natal and the liquidators to be appointed to reduce uncertainty as quickly as possible and to get the mills ready for the new season. 

“Vision is eager to commence its five-year turnaround plan, which focuses on operational stability and returning the sugar mills to profitability on a sustainable basis. We remain dedicated to working with all relevant parties to protect regional food security and transform Tongaat into a successful, pan-African agri-business.”

INDUSTRY COMMENTARY
Meanwhile, industry organisation the South African Cane Growers’ Association (SA Canegrowers) has called on government and Tongaat to do everything possible to ensure the future of the company is secured.

If an unfunded liquidation proceeds, SA Canegrowers warns that the growers supplying Tongaat’s three mills, as well as the entire industry, will face immediate non-payment for cane, levies and other legislated funding requirements.

The organisation says operations at the mills will immediately cease and many growers in the Tongaat-serviced areas will immediately lose access to the only mechanism to process their sugarcane.

Because sugarcane must be milled soon after harvesting to ensure a viable yield and due to the distance to other mills, it will leave vast amounts of this season’s sugarcane unmilled, SA Canegrowers explains.

Liquidation may also mean that Tongaat will be prevented from selling its existing stock of refined sugar to manufacturers and retailers, which immediately stops critical cash flow to the company’s operations, thereby all but ensuring the underlying asset value is diminished. 

“The underlying value of the company rests in functional, operating assets – mills that are running, cane that is being processed, and a supply of refined sugar that flows to the market. 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,” says SA Canegrowers CEO Dr Thomas Funke.

“Ensuring continuity of milling operations at Tongaat and protecting grower income must be an urgent priority for the government and the BRPs of Tongaat, irrespective of the eventual ownership outcome.

“Tongaat’s liquidation will affect all of South Africa’s 27 000 small-scale and 1 100 large-scale growers,” adds SA Canegrowers chairperson Higgins Mdluli.

The organisation points out that the potential liquidation of Tongaat also comes at a time when the local sugar industry is battling with unprecedented sugar imports displacing local sugar from retailers and food and beverage manufacturers. 

“The South African sugar industry is already under immense pressure – from the surge of deep-sea imports displacing locally grown sugar, to the continuation of the Health Promotion Levy, a policy for which no credible evidence of effectiveness has been presented.

“In such a fragile environment, the loss of three of South Africa’s 12 remaining sugar mills will be a death knell for the industry,” says Mdluli. 

SA Canegrowers says it stands ready to work with all stakeholders to safeguard milling capacity, protect growers and secure the long-term sustainability of the industry.