Mozambican company RGS, one of the bidders seeking control of troubled sugar company Tongaat Hullet, has criticised the business rescue practitioners (BRPs) for their “rush” to hold a creditors’ meeting to complete the sale of the company.
The Durban high court has ordered that the meeting, at which plans by RGS and the second Tongaat bidder, Vision Transactions, will be voted on, must be convened by January 11 at the latest.
The ruling followed an application for an interdict to halt the shareholders meeting that , which was brought by RCL Foods — whose brands include Selati Sugar — and the South African Sugar Association (Sasa).
The interdict application had been brought in response to a previous judgment that dismissed with costs attempts by the BRPs to avoid settling more than R1bn in sugar industry levies owed to Sasa members.
RGS and Vision group Transactions — a consortium of a number of companies including Guma (owned by prominent businessman Robert Gumede), Almoiz from the UAE and Terris AgriPro from Mauritius — have revised their bids to make provision for the Sasa claims.
If they thought the meeting was urgent, they should have had it on December 14
— RGS
An RGS representative who did not want to be named said the BRPs — Peter van den Steen, Trevor Murgatroyd and Gerhard Albertyn of Metis Strategic Advisors — were planning to hold the meeting before the end of this week.
The BRPs declined to comment on this.
“It’s inexplicable,” said the RGS representative. “If they thought the meeting was urgent, they should have had it on December 14.
Since the judge allowed for it to happen in January, when all creditors are back from holiday — given that the IDC [Industrial Development Corp] had extended the time for the PCF [post-commencement funding], that would have been the most logical and fair thing to do.”
The IDC has Public Investment Corp (PIC) has provided R2.3bn in funding since Tongaat entered business rescue in October last year. Funders pulled out the plug when it emerged that key former executives had allegedly manipulated accounts for years.
At least six, including former CEO Peter Staude, ex-CFO Murray Munro and an external auditor, have been charged in connection with corporate fraud amounting to R3.5bn. The company was choking under a R7bn debt pile and could not persuade funders to back its restructuring process.
About 25,000 people, mostly in KwaZulu-Natal, rely on Tongaat for their livelihoods.
RGS, which has tabled an R8bn offer for Tongaat, said it was looking at increasing this offer.
“We have been approached by a lot of the smaller creditors who are suffering as a result of this extended business rescue process and we are looking to sweeten the deal for the smaller guys to ensure that they survive and that they can hit the ground running with us,” the representative said.
Rob Bessinger, representing Vision group Transactions, confirmed that a revised plan had been submitted. “We have agreed with Sasa that we will abide by the final ruling on [its] claim … We have made provision to settle the claim, but however, this payment will sadly result in a delay in the capital expenditure programme needed to stabilise and grow [Tongaat] in terms of our detailed turnaround business plan.”
Bessinger described the business rescue process as “extremely frustrating”, not just for a bidder that was trying to save Tongaat but for the company itself, its stakeholders and those whose livelihoods depended on it.
Vision has entered into an agreement to buy the lenders’ debt in Tongaat for R3.6bn. The company is said to have paid part of the money while the rest was expected to come from the Public Investment Corp (PIC), which has set aside R2bn for the successful bidder.
However, Business Times understands that Vision has already made alternative funding arrangements as the PIC is waiting for the business rescue vote to be completed.
“We are not reliant on the PIC for funding. We have no reason to believe that should our plan be approved at the creditors meeting, it won’t be successfully implemented as set out in our business rescue plan,” said Bessinger.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.