Tongaat Hulett avoids liquidation with R200m IDC funding

A last-minute R200-million funding deal from the Industrial Development Corporation has prevented the liquidation of sugar giant Tongaat Hulett, allowing its mills in KwaZulu-Natal to open for the cane crushing season. This provides relief to more than 18,000 growers who depend on the company's facilities. The Durban high court adjourned the winding-up application until 17 June.

Canegrowers in KwaZulu-Natal expressed relief after the Durban high court averted the liquidation of Tongaat Hulett on Thursday. The Industrial Development Corporation (IDC) agreed to provide an additional R200-million in post-commencement funding, increasing its commitment from R2.3-billion to R2.5-billion until the end of June. This enables the company's mills to process 3.8-million tons of cane from over 18,000 growers, mostly small-scale farmers.

Tongaat Hulett entered business rescue in October 2022, with the Vision Group becoming the controlling creditor and approving its own rescue plan. Business rescue practitioners filed a winding-up application in February 2026, citing the plan's unfeasibility as Vision demanded more funds from the IDC and industry reforms. The company lacked cash to trade ahead of the milling season.

In court before Judge Rithy Singh, opposition came from creditors, canegrowers, the IDC, Trade, Industry and Competition Minister Parks Tau, and the RGS consortium. Dr Thomas Funke, CEO of SA Canegrowers, called the funding a 'massive relief,' noting it safeguards thousands of rural jobs. Advocate Arnold Subel, for the practitioners, said the IDC agreement offered 'a further chance' for rescue.

Advocate Ruan Kotze, for RGS, argued Vision's plan had failed and was deemed abusive by Minister Tau, urging it be set aside. Judge Singh noted it was not in stakeholders' interests to end business rescue for Tongaat Hulett, described as 'the lifeblood of this province.' She adjourned proceedings to 17 June.

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The Supreme Court of Appeal has ruled that Tongaat Hulett cannot suspend payments to the South African Sugar Association during its business rescue, increasing financial pressures. This decision comes as the Vision Group works to finalize its acquisition by refinancing Industrial Development Corporation funding. The ruling treats industry levies as statutory obligations rather than negotiable contracts.

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RGS Group Holdings has intensified its legal challenge against the liquidation of Tongaat Hulett Ltd, arguing for greater transparency amid concerns over jobs and economic stability in KwaZulu-Natal. The Mozambican group claims the company remains rescuable without the Vision consortium's plan, which it deems unlawful. Key stakeholders, including government bodies, are set to join the opposition in court.

South Africa's sugar industry, led by SA Canegrowers, is urging the government to scrap the health promotion levy, blaming it alongside cheap imports for significant job losses. Health advocates, however, defend the tax as a key measure to curb obesity and prevent diabetes-related deaths. This clash underscores broader tensions between economic pressures and public health priorities.

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