The International Development Corporation (ICD) has injected R200 million into Tongaat Hulett, raising its total investment to R2.5 billion as the company struggles to avoid liquidation.
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The International Development Corporation (ICD) has injected R200 million into Tongaat Hulett, raising its total investment to R2.5 billion as the company struggles to avoid liquidation.
This investment takes its contribution in the company, which has been in business rescue since October 2022, to R2.5 billion.
In a note to shareholders, Tongaat Hulett says the funding agreement has also been extended to the end of June. This, it says, gives it “more time to access the money and repay it”.
The IDC’s cash injection held off a liquidation hearing set to be heard yesterday. The liquidation hearing has been postponed and is “now scheduled to be heard on 17 and 18 June 2026 [Saturday],” it said.
Can’t rescue
The business rescue practitioners previously said there was no longer a reasonable prospect of rescuing the company and filed for provisional liquidation. “As a result, the business rescue plan is no longer capable of implementation,” the company said at the time.
This followed a sale agreement underpinning its rescue plan had lapsed after suitor Vision declined to grant an extension, leaving the plan no longer capable of implementation.
The rescue plan, approved by creditors in January 2024, had relied on Vision acquiring key assets and stabilising the business through a combination of restructuring and asset sales.
Its implementation was subject to several conditions, including the refinancing of a R2.3 billion facility from the IDC, the funding of a R517 million escrow account linked to the South African Sugar Association, and R75 million for distribution to concurrent creditors.
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Payment commitments
Tongaat Hulett will need to repay the full amount to the IDC before any sale of the business, unless the funder agrees to convert the debt into a longer-term loan.
The company said the additional funding will help it continue operating during the current off-crop period and prepare for the next milling season.
Tongaat Hulett went into business rescue after the board found the companies were in “financial distress” due to a working capital shortfall of about R1.5 billion.
The crisis followed years of high debt, alleged accounting irregularities, and poor management, worsened by the COVID-19 pandemic and the KwaZulu-Natal unrest in 2021. A group of banks had also refused to extend more credit.
The implementation of the business rescue plan has faced several challenges, including missed funding deadlines. The company used to operate four sugar mills in South Africa, on the KwaZulu-Natal north coast and in Zululand.