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Sugar giant’s issues move toward resolution

Home Business Management Legal Sugar giant’s issues move toward resolution

THE Competition Commission has recommended the approval of Vision Consortium’s acquisition of Tongaat Hulett Limited, with conditions, it said in a statement on 20 June.
The commission said it is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market.

To address public interest concerns, the commission said Vision has committed to the following:

  • Incrementally increase THL’s land under sugarcane within six years of the merger implementation date.
  • Vision has committed to, within five years of the merger implementation date, procuring a percentage of THL’s sugar cane feedstock requirements from historically disadvantaged persons (HDPs) for the production of sugar and animal feeds.
  • In addition, Vision will direct financial support to HDPs within THL’s agriculture value-chain and establish broad-based trusts for the benefit of small-scale growers and employees, respectively.
  • Further, Vision has set aside equity within THL which will be made available to employees and small-scale farmers.
  • Finally, the merging parties have agreed to a moratorium of three years on merger-specific retrenchments.

Ongoing legal dispute

In response to the Competition Commission’s recommendation, the SA Canegrowers said it hopes now that the consortium commits to honouring the almost R526 million in outstanding obligations to the sugar industry.

“The consortium’s commitment to procure cane from small-scale growers, as well as provide financial support for such growers, will bring welcomed stability,” says Higgins Mdluli, chairman of SA Canegrowers. “But the industry also hopes that the new owners will honour the outstanding levies and put the matter to rest.”

In May this year, the Durban High Court confirmed that the outstanding levies are due to be paid by Tongaat Hulett to the sugar industry. SA Canegrowers says the overdue payments of these obligations are putting all canegrowers and many livelihoods in the sugar industry at risk. The sugar industry supports the livelihoods of one million people.

The levies form part of the obligations that are due under the sugar legislation which is legally binding on all members of the industry and that serves to ensure that growers, millers and refiners each receive equitable treatment under the law, such as the provisions that determine the sharing of the proceeds from sugar production.

During 2022 and 2023, Tongaat suspended paying the statutory levies for a few months up until March 2023, claiming that it did not have to pay whilst in business rescue. It applied to the courts to have the payment of the levies suspended under the Companies Act, but the Durban High Court in 2023 confirmed that the SIA must be honoured and that the Companies Act did not override the sugar legislation. This means payments due under the provisions of this legislation must be honoured by the millers even if they enter business rescue. In May, the Durban High Court dismissed the leave to appeal brought by Tongaat’s business rescue practitioners.

The Business Rescue Practitioners (BRPs)of Tongaat Hulett, Gerhard Albertyn, Trevor Murgatroyd and Petrus van den Steen said in the latest monthly report, for May, (which is also the fifteenth such report) that they continue to advance the preparatory steps for the implementation of the various plans approved and adopted for Tongaat Limited and its entities in January 2024.

Concerning litigation matters, the report says the company and the BRPs lodged a Petition for leave to appeal the High Court judgment in the Supreme Court of Appeal in Bloemfontein on 6 June 2024.

THL went into business rescue in October 2022. THL remains in business rescue until the plan has been substantially implemented or alternatively if it is no longer financially distressed. The decision to terminate business rescue lies with the BRPs or alternatively the High Court on application.

Vision consortium consists of various special purpose vehicles which are owned and controlled by Guma Agri and Food Security Limited, Almoiz NA Holdings Limited, Remoggo (Mauritius) PPC and Terris AgriPro Limited.

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