BUSINESS Rescue Practitioners (BRP) in Tongaat Hulett are preparing to implement the business rescue plan for the company as they believe that the company can be salvaged.
In January, Tongaat Hulett shareholders adopted an amended business rescue plan which the BRP are now preparing to implement after the company was rocked by an accounting scandal, spinning into a debt of R8.2 billion amid delays to publish its financials.
“The business rescue practitioners continue to advance the preparatory steps for the implementation of the Adopted and Amended Business Rescue Plan of the Company as approved and adopted by the requisite majority of creditors on Wednesday, 31 January 2024 in accordance with section 151 of the Companies Act,” Tongaat Hulett said in an update on Friday.
The BRPs are concurrently readying for implementation the rescue plans for other associated companies of Tongaat Hulett.
These include Tongaat Hulett Developments Proprietary Limited, whose plan continues to be implemented.
It noted, however, that the business rescue proceedings were “wholly dependent on the business rescue proceedings and inextricably linked to the business rescue plan” of the other associated companies.
Last month, Powertrans Sales & Services, a creditor in the business rescue proceedings of the embattled sugar company, approached the High Court to have the business rescue plan for Tongaat set aside.
Owed about R2 million by Tongaat, Powertrans said in a statement that it had supplied evidence to the court suggesting Tongaat’s BRPs had yielded to pressure exerted by the lending group.
The group consisted of banks and financial institutions owed billions of rand by Tongaat, and an opaque consortium of businesses registered in Mauritius and the United Arab Emirates.
In February, an urgent interdict application to the court by Powertrans was dismissed due to lack of urgency and Powertrans was ordered to pay costs.
However, RGS Group, which joined the application and which had put forward a competing business plan that was withdrawn at the last minute, was not ordered to pay costs.
Tongaat also notified affected parties of the latest court challenge, although a spokesperson said they would not comment further.
In January, Tongaat creditors voted in favour of a business rescue plan put forward by an investment consortium called Vision Investments in South Africa that would see unsecured creditors receive between 5c and 7c to the rand on their claims.
Tongaat Hulett’s financial performance has remained in loss making.
It saw basic losses for the year to March 2022 from continuing operations widen from R762m to R1.07bn, even as it started to receive dividends from Zimbabwe.
The South African business of Tongaat Hulett alone carries about 85% of its total debt at R6.9bn, while Mozambique accounts for 12%, with Zimbabwe making up for R255m or 3% of the total figure.
Revenues in Tongaat Hulett for the year to March 2022 remained unchanged at R15.5bn, with the operating profit of R584m falling from the 2021 restated profit of R1.4bn.
Tongaat’s earnings before interest, taxes, depreciation and amortisation for the period fell 67% to R591m against a marked reduction in free cash flows, from R802m to R297m, prompting the company to withhold a dividend for the period.
BUSINESS REPORT