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The release of a business rescue plan for embattled sugar producer Tongaat Hulett has been pushed by a month until the end of February, when CEO Gavin Hudson will also leave the firm after just over four years in the job.
The firm's business rescue practitioners said in a statement that the delay came amid efforts to secure post-commencement financing for the company, meeting with affected groups, as well as investigating the affairs of the company, "which are very complex".
Tongaat had entered business rescue in October, and lenders had previously agreed to about a two-month extension to its rescue plan.
Since then, the firm had secured post-commencement financing from the Industrial Development Corporation (IDC), saying on Monday that this "key step" in the process would allow for focusing on achieving successful business rescue of Tongaat and its underlying businesses.
The firm said Hudson would be leaving the group with effect from 28 February 2023, but his core team of executives would remain.
Hudson, a former SABMiller executive, was appointed on 1 February 2019 to spearhead a turnaround of the group, a mandate which included a comprehensive review of its finances. This review, along with an initial investigation into allegations made through a whistleblowing line, prompted further examinations. This then led to the firm asking the JSE to suspend trade in its shares in June 2019, amid concerns that its previous financial results couldn't be relied upon.
In what subsequently turned into SA's second-biggest accounting scandal after Steinhoff, a PwC probe identified 10 executives, including former CEO Peter Staude, who were allegedly involved in profit inflation. Charges have been laid against some of the former executives, and proceedings are expected to resume in 2023, with a pre-trial conference scheduled for 17 February.
Read | Bad books: Tongaat shareholders call for settlement with Deloitte amid cash crunch
Tongaat's shares had crashed in the wake of the scandal, and the firm had been battling with a crippling debt pile in its SA operations, which was threatening the group's survival. The firm successfully disposed of its starch business, but plans to sell off property in KwaZulu-Natal were derailed, in part as a result of civil unrest in 2021 that hit property values. Covid-19, as well as floods in KwaZulu-Natal, came as additional blows to the more than 130-year-old sugar group.
A plan to raise up to R5 billion in a rights issue also failed to materialise, amid controversies centred on underwriter Magister Investments, and Hudson had mooted this as a way to keep the group's sugar operations intact.
Tongaat's board then approved a plan in October that included disposing of its non-SA operations, securing investment for its SA business, introducing a five-year debt instrument that would be repaid through land disposals, as well as continuing to recoup money related to its accounting scandal. This, however, was rejected by lenders, sending the group into business rescue.
Read | Tongaat says business rescue not 'the end of the road' for its SA sugar business
