The South African Canegrowers Association said on Thursday it would back the sale or partial sale of Tongaat Hulett Limited (THL) rather than a fire sale of assets as the best way forward with 1 million sugar sector livelihoods hanging in the balance.
This after the the Joint Rescue Business Rescue Practitioners (BRP) released a business rescue plan on Wednesday, which said eight potential strategic equity partners were interested in the acquisition of, or investment in the business, or parts of its SA Sugar businesses.
However, the BRP said if there were any unsold or excluded assets, the BRPs would seek purchasers through controlled, accelerated sale processes.
Final offers were expected to be received during this month and creditors would vote on the business rescue plans on June 14, it said.
Thomas Funke, the CEO of SA Canegrowers, said, “Essentially, all that the plan has announced is that there are conditionalities at play, and certain events are still taking place. That means the 1 million livelihoods dependent on the sugar industry remain at grave risk.”
SA Canegrowers gave commentary on the pros and cons of the two potential plans that the business rescue document set out.
It said in the first plan, which it understood was the preferred option for THL, assets would be sold to new owners, in part or in full, and the business would continue operating. There were eight interested parties and that binding offers were due on June 15.
“This is the least disruptive avenue, and one which SA Canegrowers would support, provided certain fundamentals are in place to safeguard the ongoing sustainability of the role that THL plays in both the sugar industry and, in turn, the broader KwaZulu-Natal economy” said Funke.
He said the second plan was a far riskier one. Much would depend on whether an eligible buyer could be found.
“It would seem that if no appropriate buyer is found, the assets will be sold in a fire sale. This puts the entire sugar value chain at risk, and the 1 million livelihoods dependent on it across the country. Because, if the sugar business of THL is not sold as a unit, the entire structure of the industry, that has been in a delicate functioning balance for over 100 years, would be destroyed,” said Funke.
SA Canegrowers said it looked forward to the detail of the business rescue plan as soon as possible, so that it could continue its role in positively contributing to jobs, food security and economic stability, especially in the deep rural areas of KwaZulu-Natal and Mpumalanga.
BUSINESS REPORT