Source: Why Tongaat SA liquidation won’t affect its Zim operations – herald

Business Reporter

TONGAAT HULETT’s business rescue practitioners have applied for the provisional liquidation of the South African sugar giant after a rescue deal collapsed, but stressed that operations in Zimbabwe, Mozambique and Botswana would continue unaffected.

The company, placed under business rescue in October 2022, saw its last hope of survival extinguish when Vision Sugar declined to grant an unconditional extension of lapsed sale agreements.

The business rescue practitioners filed a liquidation application with the High Court in KwaZulu-Natal on Thursday.

In a detailed statement, the practitioners said they had “exhausted all reasonable endeavours” to avoid the outcome but concluded there was “no longer a reasonable prospect of implementing the adopted business rescue plan or rescuing Tongaat as a going concern”.

However, the firm moved to reassure stakeholders in its regional operations.

“It is important to note that this development relates to Tongaat Hulett Limited (THL) in South Africa,” the practitioners said.

“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 clarification is being watched closely in Zimbabwe, where Tongaat Hulett’s sugar operations are a significant employer and economic contributor.

Tongaat Hulett sugar operations in Zimbabwe include the wholly owned Triangle Sugar operation and its 50,3 percent shareholding in Zimbabwe Stock Exchange-listed Hippo Valley Estates.

Tongaat Hulett Zimbabwe head, corporate and industry affairs, Dr Dahlia Garwe, provided further clarity, saying developments in South Africa will not affect the external operations in Zimbabwe and Botswana.

“We recognise that news of Tongaat Hulett Limited’s liquidation in South Africa may cause concern about our operations here in Zimbabwe. We want to provide clarity and assurance.

“The joint business rescue practitioners of Tongaat Hulett Limited have applied to the High Court of South Africa for an order discontinuing the company’s business rescue proceedings and placing THL (South African operations) into provisional liquidation.

“This decision follows the business rescue plan no longer being implementable as a result of the lapsing of the sale agreements with Vision Sugar.

“The developments in South Africa do not involve our Zimbabwean operations, which function as independent legal entities with separate management,

finances and operations.

“Triangle Ltd and Hippo Valley Estates Ltd remain financially robust, operationally sound and fully committed to all contractual obligations. Production continues normally and we reaffirm our commitment to Zimbabwe’s agriculture sector and communities,” she said.

While the South African parent company has been in financial distress, the Zimbabwean units continue to trade independently, serving as a separate, functional asset base.

The Zimbabwean operations are not dependent on the cash flows of the South African parent company and have their own funding structures.

The crisis facing Tongaat is largely concentrated in its South African unit due to debt, management issues and unfavourable local market conditions.

Hippo Valley and Triangle are separate legal entities, even though they are subsidiaries of the broader Tongaat Hulett Group.

They are not directly under the South African insolvency jurisdiction.

In the business rescue plan, the Zimbabwean operations were separated to ensure their survival and to protect thousands of local jobs and sugarcane outgrowers.

Even when the parent company in South Africa entered business rescue and, more recently, moved towards liquidation, the Zimbabwean operations continued to operate in the ordinary course of business.

Tongaat Hulett entered voluntary business rescue on October 27, 2022.

The sugar producer entered business rescue following severe historic accounting irregularities, financial misstatements and governance failures under former senior management, which resulted in an accumulated debt of R11 billion (approximately US$630 million at current exchange rates).

Tongaat Hulett management misstated financial statements and falsified accounts primarily to inflate profits, meet performance targets and trigger bonus payments for senior executives.

Vision Group acquired the lender group claims in May 2025.

Vision Group is a consortium that secured control of Tongaat Hulett’s sugar operations in Zimbabwe, Mozambique and Botswana in 2025 to revive the distressed Southern African agri-business.

Tongaat says the implementation of the business rescue plan was principally dependent on the refinancing of the post-commencement funding (PCF) facility and satisfaction of the South African Sugar Association (SASA) escrow amount.

Tongaat Hulett’s PCF facility was a critical financial lifeline secured during its business rescue process to prevent a total operational shutdown.

It provided necessary working capital, allowing the company to continue operations, pay employees and maintain critical infrastructure.

The SASA escrow amount was a ring-fenced sum, estimated at R517 million to R526 million (US$33 million at current exchange rates), intended to settle outstanding statutory levies and industry obligations owed by Tongaat Hulett.

It was a key component of the business rescue plan to secure funds for the local sugar industry and protect it, covering unpaid levies and fees from the 2022/2023 season.

Tongaat says Vision chose to seek funding from the Industrial Development Corporation (IDC) of South Africa 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.