SA Canegrowers meet Tongaat BRPs after sugar giant misses crucial R400m payment

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Tongaat Hulett is seeking R450 million from some of its former directors.
Tongaat Hulett is seeking R450 million from some of its former directors.

The SA Canegrowers' Association says it is meeting with the business rescue practitioners of Tongaat Hulett on Wednesday after a deadline to pay R401 million to about 4 300 growers was missed.

In October, Tongaat announced that its lenders had not given a nod to its business rescue plan, with the firm appointing Metis Strategic Advisors, which is expected to continue talks with lenders - most of SA's major financial institutions - about post-commencement financing, as well as develop a plan to rescue the business.

SA Canegrowers, which dates back to 1927 and serves as a platform for organisations in the industry, said on Tuesday around 4 300 growers who delivered almost 600 000 tons of sugarcane in September were due to receive payment at month end, with more than 4 000 of these small-scale growers who are especially vulnerable. 

The nonpayment also places the livelihoods of an estimated 14 642 permanent and seasonal farm workers employed by these growers at risk. Notably, this figure excludes contractors, haulier companies, input suppliers, millworkers, and others in the value chain, the lobby group said.

The number of jobs at risk is likely to increase as uncertainty rises about whether growers who delivered cane in October will be paid on time. An estimated R345 million will become due for payment at the end of November to cover these sugarcane deliveries.

"The impact of the current situation is far-reaching and will be devastating," it said. "Affected communities will include the rural areas of Empangeni, Eshowe, Gingindlovu, Amatikulu, Darnall, KwaDukuza, Shakaskraal, Tongaat, Ndwedwe, Isinembe, Nyoni, Entumeni, Kwambonambi, Nseleni, Melmoth, and Heatonville, Jozini and the Makhathini Flats, which already suffer from high levels of unemployment and poverty."

Tongaat Hulett has been battling with a roughly R6.5 billion excess debt pile in SA, which has led to a significant cash burn for the local operations, with the business rescue process coming even as the milling and crushing season continues.

Tongaat CEO Gavin Hudson said after the business rescue announcement that the firm had about R1 billion in sugar to process, and the firm's priority was to try to ensure normality.

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