Tau lambasts Tongaat BRPs over liquidation application

Minister of Trade, Industry and Competition Parks Tau has lambasted the conduct of the business rescue practitioners (BRPs) of financially distressed, suspended JSE-listed sugar producer and property developer Tongaat Hulett.

Tau said the Companies Act is being “abused and perverted” by the BRPs in an attempt to force the liquidation of Tongaat “against the public interest”. This in an affidavit released on Friday opposing the high court application by the BRPs to discontinue the business rescue and liquidate the company.

He said the Industrial Development Corporation (IDC) affidavit demonstrates that viable rescue options are still available.

In a sideswipe at both the BRPs and the Vision Group, the bidder for Tongaat and owner of the lender group claims, Tau said the Companies Act was designed to preserve viable enterprises and jobs, “not to facilitate premature liquidation at the behest of creditors or frustrated stakeholders”.

ALSO READ: Minister Tau moves to save Tongaat Hulett from liquidation

Both Tau and the IDC are advocating for the continuation of Tongaat’s business rescue, with a review of the business rescue plan.

Funding, restructuring ‘remain available’

Tau denied various assertions by the BRPs, including that there is no funding for Tongaat to continue its operations, and that this is contributed to by the lack of certainty concerning the existing post commencement finance (PCF) facility advanced by the IDC.

He said the continued business rescue of Tongaat will “prevent a jobs bloodbath often associated with liquidation, stabilise the sugar industry, and support small business at risk of losing their main markets”.

“Post-commencement finance remains available, and there are restructuring options that are actively being pursued.

“The IDC proposal provides the building blocks for a corporate rescue, whereas liquidation is a blunt instrument that ignores this progress and prematurely assumes failure where restructuring remains viable,” he said.

Tau added that the BRP’s reliance on the Vision Group’s refusal to extend the validity of its agreement “undermines the rescue process itself”.

He stressed that a business plan cannot succeed “if stakeholders deliberately frustrate its implementation”.

Tau said the IDC’s affidavit makes it clear the rescue plan was designed to secure continuity, but the Vision Group’s failure to extend the validity of its agreement weakens the framework.

“The failure lies not in THL’s [Tongaat Hulett Limited] viability but in Vision’s unwillingness to honour its commitments.

“This conduct should not be rewarded by liquidation, nor should it be allowed to derail the rescue process that remains capable of success,” he said.

ALSO READ: Tongaat Hulett’s collapse began in the boardroom

Tau said the IDC is exposed to Tongaat’s survival and he has mandated its continued support, adding: “Liquidation would not only crystallise IDC’s losses but undermine government’s broader industrial policy objectives”.

He also highlighted public interest considerations in opposing the liquidation application and confirmed he is engaging with stakeholders across the industry to find a solution to the current crisis, which is having a devastating impact.

It is apparent to him that these stakeholders are equally concerned about the consequences Tongaat’s liquidation would have on the sector.

Tau also emphasised the severe social and economic consequences that will ensue for the South Africa’s sugar industry and the wider economy if Tongaat were liquidated, particularly the rural economy of KwaZulu-Natal and Mpumalanga, small-scale farmers, and farming towns.

“The business is critical to the South African economy, the regional economy of KwaZulu-Natal and Mpumalanga, and the ecosystem of the region,” he said.

Liquidation claims ‘manufactured’ – IDC

IDC divisional executive for agro-industries and services sector Bongani Miya said the assertion there is no funding available for Tongaat to continue, which is attributed to uncertainty around the existing PCF facility advanced by the IDC, is both factually and legally incorrect.

Miya said this assertion fails to explain why the funding challenges cannot be addressed within the existing restructuring plan.

“It also fails to recognise the assessment of management that THL [Tongaat] can operate within the confines of the existing PCF facility and its available and projected cash flow until June 2026.

“The IDC has proposed the continued provision of PCF to satisfy THL’s solvency requirements in respect of ongoing operations, provided that THL remains under business rescue,” he said.

“This remains the IDC position with regard to the PCF advanced and, in general, to its PCF commitment towards THL.”

Miya said reliance for the urgency of the BRP’s liquidation application is placed on a recent demand made by Vision Investments 155 (Pty) Ltd, a facility agent, on the instructions of Vision.

He explained that the Vision Group closed a transaction for the acquisition of the lender group’s claims and security against THL in June 2025 and, as such, stepped into the shoes of the lender group as a pre-commencement creditor.

ALSO READ: Farmers sweat over uncertainty of Tongaat Hulett’s future

Tau said Vision Group is bound by the plan approved by the lender group.

“The assertion that the demand supports the urgency of this application ignores the statutory moratorium … which is contained in Section 133 of the Companies Act, 2008.

“The demand and enforcement of all rights under any security held by V155 remains suspended throughout the business rescue proceedings of THL,” he said.

Miya further rejected suggestions that the liquidation application is urgent because a provisional liquidator must be appointed to take control of and preserve THL’s assets, discharge payment of salaries and day-to-day operational expenses – because all these functions fall within the BRPs’ powers and mandate under the restructuring scheme.

He said the urgency of the liquidation application is “manufactured” to involve functions the restructuring scheme entrusts to the BRPs.

Apart from the Department of Trade, Industry and Competition and the IDC, the liquidation application is also being opposed by:

• The SA Canegrowers Association;
• Abrina 9244 (Pty) Ltd, trading as Hariyali Farms, a sugarcane grower contracted to Tongaat; and
• Mozambican-based RGS Group Holdings, a former rival bidder for the company.

BRPs defend their position

Gerhard Albertyn, one of the three jointly appointed BRPs for Tongaat, said in a responding affidavit that the IDC has not provided the court with a single objective or factually tenable reason as to why the court should exercise its discretion in refusing the relief sought by the BRPs.

Albertyn said the overwhelming facts in the BRPs’ founding affidavit are not seriously disputed and overwhelmingly support the BRPs’ position.

He said:

• The IDC’s contentions are clearly inconsistent and constitute an ex post facto defence of and rationalisation for its failure to conclude an agreement with Vision and provide the desperately needed funding required by Tongaat, and are belatedly advanced to support its unjustified opposition to these proceedings.
• It is untenable for the IDC to selectively rely upon representations from the BRPs to advance its case when the same BRPs identified a R600 million funding requirement, which to date has not been satisfied.
• Once the BRPs concluded that there was no reasonable prospect of rescue, they were statutorily obliged to apply for liquidation.
• The IDC’s characterisation of the application as “premature”, in circumstances where it refused to provide urgently required funding, conflates the practitioners’ mandatory duty with the court’s discretion.
• The IDC’s proposals amount to speculative optimism unsupported by concrete commitments, as there is no binding funding agreement, no clearly identified alternatives to the failed business plan, no stakeholder commitment from the Vision Group, and no realistic timeframe for achieving the objectives of the business rescue.

NOTE: The Vision Group on Saturday (7 March) said it has noted with grave concern the circulation of factually incorrect social media reports claiming “Peter Moyanga” has joined Robert Gumede in the acquisition of Tongaat for R4 billion.

Vision said this information is a complete fabrication that emanated from a social media post.

This article was republished from Moneyweb. Read the original here.