APPLICATIONS Court sets date for bid to interdict vote on Tongaat rescue

The Durban high court has postponed two applications by RCL Foods and the SA Sugar Association (Sasa) to interdict Tongaat Hulett’s business rescue vote until Wednesday, RCL has confirmed.

This means the Tongaat business rescue vote, in which creditors will choose a buyer for the firm, cannot go ahead this week Friday, delaying an end to the 14month business rescue process.

The application for an interdict by the parties has been made because Tongaat had not paid R1.1bn in levies Sasa says is owed to the industry.

Tongaat lost its separate court bid last week to have those levies suspended under the business rescue process. Sasa and RCL feel the two bids by potential buyers of Tongaat do not both deal sufficiently with repaying them the money they say is owed to them.

The sugar levy paid to Sasa by farmers and millers is part of a redistributive mechanism in a highly regulated industry that ensures all farmers get the same price per tonne of sugar. It is part of the sugar industry agreement, which is a legally binding contract.

When indebted Tongaat did not pay the levies between October 28 2022 to end-March, farmers and other millers such as RCL paid in extra, but it appears Sasa wants to recoup that money. RCL paid in about R234m more than it should have.

Tongaat had applied to the Durban high court to order that levies could be withheld during business rescue in the same way money owing to creditors is not paid and dealt with later.

RCL and Sasa want the levies paid and do not want the firm handed over to a new buyer until the issue is resolved.

RCL says Tongaat is appealing against last week’s court decision, but the business rescue practitioners, Metis Strategic Advisory, have declined to comment on the matter.

Meanwhile, “RCL Foods can confirm that today’s high court [interdict] hearing was adjourned until Wednesday December 13,” RCL said. Tongaat’s application for leave to appeal will also be heard on Wednesday, the company said.

Judge Rashid Vahed, who is hearing Tongaat’s appeal on the levy case and the two interdict applications, has postponed the Tongaat business rescue vote to Thursday, December 14. However, should the interdict applications succeed, the vote will obviously not take place.

Tongaat said in a note to creditors it is opposing both Sasa’s and RCL’s interdict applications.

Tongaat has been in business rescue since October 2022 and creditors, including banks, were supposed to choose a buyer for the business this week, ending the drawn-out process.

One of the two parties interested in taking over Tongaat is RGS Group, a Mozambican sugar, tea and consumer goods firm run by the powerful Gulamo family.

It has offered generous payouts to Sasa over 12 months in four payments. The other bid is by Robert Gumede’s consortium, Vision, which is offering very little to reimburse Sasa for unpaid levies.

Gumede’s consortium told the media in November it had signed a deal to buy the R7.7bn debt from the banks, which would give it the lenders’ majority vote over who could buy the business.

It does not appear that the deal has been finalised, meaning Gumede’s consortium will not hold the majority vote on who can buy Tongaat. Instead, it will compete on an equal footing with RGS and let the creditors, such as the banks, decide on the best offer when the vote eventually goes ahead.

Retail Correspondent