The financially stressed sugar producer missed the deadline to pay about R400-million to 4,000 small-scale farmers supplying the Felixton, Amatikulu and Maidstone mills last week, but over the weekend, the SA Canegrowers announced that some of the growers had now been paid.

When asked how much had been paid to the suppliers, Tongaat’s business rescue practitioners (BRPs), Metis Strategic Advisers, declined to disclose the quantum.

It’s believed about 300 commercial growers, however, have still not been paid.

This morning, the BRPs confirmed the advancement of the “initial amounts of urgent post commencement finance, which has facilitated payments to certain critical suppliers and/or creditors, including small-scale growers”. 

“The BRPs are aware of the complexity and magnitude of the current challenges and continue their efforts to obtain additional post commencement finance.”

The SA Canegrowers association warned last week that any further payment issues would trigger a “jobs bloodbath” and lead to widespread socioeconomic fallout.

On Thursday, the company revealed that its five remaining non-executive directors of Tongaat Hulett — Andile Sangqu, David Noko, Louisa Stephens, Robin Goetzsche and Graham Clark — had resigned, effective immediately.

The official reason given for the resignations was that the directors believed “any role they could meaningfully play in relation to Tongaat Hulett in its present circumstances was extremely limited”.

The remaining board members thanked their outgoing colleagues for their support and the “invaluable guidance” provided during the past three years.

On Thursday afternoon, the BRPs issued a brief statement, saying they had met with Tongaat employees, as required in terms of the Companies Act. The BRPs confirmed that, in line with the Labour Relations Act, employees’ rights remain protected during the business rescue process.

“The BRPs are scheduled to meet with creditors on Tuesday, 8 November 2022. In the interim, the BRPs are focusing on stabilising operations whilst seeking the requisite post-commencement funding.”

Tongaat Hulett announced on 27 October that it had been forced to enter business rescue in SA, with Metis as the BRPs.

Tongaat, which operates in the sugar, ethanol, animal feeds, cattle and property sectors, has a significant footprint throughout southern Africa, but operations in Botswana, Mozambique and Zimbabwe will be unaffected by the SA business rescue process.

Linked to the demise of the local sugar producer is the criminal trial of six former Tongaat executives and an auditor, who are facing 26 charges of contravention of the Financial Markets Act, the Companies Act and Prevention of Organised Crime Act. 

Read more in Daily Maverick: “Tongaat Hulett enters voluntary business rescue after its restructuring efforts hit a brick wall”

Metis told Business Maverick on Friday it “understands and respects” the motivations of the directors in resigning from their positions during business rescue proceedings.

“The BRPs thank the departing directors for their services and wish them well and will continue to work constructively with the management team and the remaining members of the board,” Metis said.

On Tuesday, 8 November, the BRPs are scheduled to meet creditors. In the interim, they said they are focusing on “stabilising operations whilst seeking the requisite post-commencement funding”.

The resignations follow others in recent months:

• On 17 October, Jean Nel notified the board of his resignation as a non-executive director and as a member of the company’s audit and risk committee, effective immediately. Nel had previously indicated that he would step down as a director, but would first see through the finalisation and approval of the capital restructuring plan, which was approved by the board on 14 October 2022.
• In September, Linda de Beer, an independent non-executive director of the board, indicated her intention to resign at the end of her three-year term, effective at the end of that month.

Socioeconomic calamity

This week, SA Canegrowers called for government intervention to protect jobs and farmers affected by Tongaat Hulett’s financial woes, which threaten more than 14,600 jobs in the sector.

SA Canegrowers has warned that any further payment issues will not not only be catastrophic for the industry, but would trigger a socioeconomic calamity in KwaZulu-Natal’s North Coast that would overshadow the July riots of 2021.

On Wednesday, 2 November 2022, the association issued a statement, saying engagements with Metis had been constructive and it was confident the BRPs understood the urgency of paying growers as well as the importance of restoring operations at the sugar producer’s mills as soon as possible.

For many small-scale growers, this is the only payment they have received this season. If funds for deliveries made in October that are due at the end of November are not paid, it will be catastrophic for both large- and small-scale growers.

“This is why we have asked for the government to intervene and reiterated our willingness to work with all stakeholders to avoid the jobs’ bloodbath that will ensue if we don’t address this situation urgently,” the association said.

The estimated 14,600 jobs affected does not include the contractors, haulier companies, input suppliers, mill workers and other service providers throughout the value chain whose payments are also affected by the crisis. BM/DM