Durban – The joint Business Rescue Practitioners (BRPs) of Tongaat Hulett Limited (Tongaat) have applied to the High Court of South Africa, KwaZulu-Natal Division, for an order discontinuing the company’s business rescue proceedings and placing the sugar producer into provisional liquidation.
This decision, announced on Thursday, 12 February 2026, after exhausting all reasonable endeavours, follows the Business Rescue Plan no longer being implementable as a result of the lapsing of the Sale Agreements with Vision.
This is an outcome the BRPs did everything in their power to avoid, fully aware of the profound impact on employees, growers, suppliers, creditors, clients, and the many families and communities whose livelihoods depend on the company.
However, the circumstances that ultimately necessitated this application arose beyond the control of the BRPs and within the constraints of their statutory duties under Chapter 6 of the Companies Act.
Tongaat entered business rescue in October 2022 following severe historic accounting irregularities, financial misstatements, and governance failures under former senior management.
Approximately R12 billion in shareholder value was destroyed, with the company’s balance sheet, credibility, and access to funding severely impaired.
Since their appointment, the BRPs have been managing the consequences of this legacy under exceptionally constrained conditions and supported by critically required funding from the IDC.
The adopted Business Rescue Plan, proposed by Vision and approved by creditors in January 2024, was premised on a debt-to-equity exchange, failing which an asset sale transaction.
As shareholders did not support the debt-to-equity option, the plan accordingly required implementation of transactions contemplating Vision acquiring Tongaat’s operating assets in South Africa, as well as its investments in Zimbabwe, Mozambique, and Botswana, and assuming responsibility for stabilising the business.
The plan contained three critical conditions:
- i. Refinancing of the Industrial Development Corporation’s (IDC) post-commencement funding (PCF) facility of R2.3 billion into a structure assumed by Vision;
- ii. Funding of an escrow account in the amount of R517 million in respect of the South African Sugar Association (SASA), pending the outcome of legal proceedings; and
- iii. Provision of R75 million for distribution to concurrent creditors.
Vision finally acquired the Lender Group claims in May 2025.
From that point onward, the implementation of the Business Rescue Plan was principally dependent on the refinancing of the PCF facility and satisfaction in relation to the SASA escrow amount.
Vision chose to seek funding from the IDC to fulfil these obligations. This process remained ongoing for several months.
Despite repeated engagements, Vision and the IDC were unable to conclude binding funding arrangements.
During this period, Vision introduced new demands and conditions that were never contemplated in, nor capable of accommodation, under the adopted Business Rescue Plan.
These included funding requirements beyond the financing of the IDC PCF facility and the SASA escrow amount.
These demands materially complicated and delayed discussions between Vision and the IDC, as well as the implementation of the Plan at a time when Tongaat’s liquidity position was under severe pressure.
As the Sale Agreements approached expiry, the IDC and its advisers were actively engaged in finalising feedback on funding proposals.
The BRPs requested a short extension to allow the IDC to conclude its processes and to consider the proposals made by Vision to the IDC.
Vision considered the request and indicated that it was prepared to grant an extension, subject to the imposition of new, material conditions.
The BRPs determined that these conditions were not acceptable, as their fulfilment would have run counter to the agreed methodology for implementing the approved BR Plan, exposed THL to significant commercial risk, and potentially placed THL in breach of its contractual undertakings to third parties.
Broader market conditions deteriorated significantly as well, including a sharp decline in domestic sugar sales as cheap imported sugar continued to enter the market in record volumes, undermining local demand and revenue.
These external factors further constrained cash generation and compounded the company’s liquidity challenges.
As a consequence of Vision’s refusal to unconditionally extend the closing date, and the non-fulfilment of the Plan’s conditions, the Sale of Business Agreements lapsed on 7 February 2026, and as a result, the Business Rescue Plan has become unimplementable.
The company has subsequently received a letter of demand from Vision for approximately R11.7 billion, stated to be immediately due and payable.
This claim has profound implications for Tongaat’s solvency and constitutes a material and immediate threat to the company’s continued existence.
In the considered view of the BRPs, and based on objective grounds, there is no longer a reasonable prospect of implementing the adopted Business Rescue Plan or rescuing Tongaat as a going concern.
This arises in the material part from Vision and IDC not reaching an agreement on binding funding arrangements, and Vision’s continued pursuit of relief and write-offs, which prevented final IDC approval.
In these circumstances, and in compliance with their obligations under Section 141(2) of the Companies Act, the BRPs have no alternative but to apply to discontinue the business rescue proceedings and place Tongaat into provisional liquidation.
If a provisional liquidation order is granted by the High Court, the Master of the High Court will appoint a provisional liquidator, who will assume responsibility for overseeing the winding-up process, engaging with creditors, securing the company’s assets, and guiding the submission and adjudication of creditor claims.
The BRPs will cooperate fully with the appointed liquidator to ensure an orderly transition and continued transparency for all stakeholders.
It is important to note that this development relates to Tongaat Hulett Limited in South Africa.
It does not affect the ongoing operations of the company’s businesses in Zimbabwe, Mozambique, or Botswana, which continue to trade and operate in the ordinary course under their respective structures.
Further communication will be issued once the Court has ruled on the application and the next steps have been confirmed.
The BRPs, along with the Tongaat senior leadership team, stated that they recognise that this development brings significant uncertainty and distress for employees, creditors, suppliers, and surrounding communities, and remain committed to providing clear, timely updates as the process unfolds.
Commenting on the matter, SA Canegrowers warned that the liquidation of Tongaat Hullett puts the entire sugar sector at risk.
“A liquidation will directly threaten the earning potential of thousands of small-scale and large-scale growers across KwaZulu-Natal and Mpumalanga,” stated the SA Canegrowers.
Tongaat’s sugar mills, refining facility, and cane-growing operations are the economic anchor of entire rural regions.
“SA Canegrowers, and the tens of thousands of growers we represent, continue to call on the government and Tongaat Hullet and to do everything possible to ensure that the future of Tongaat Hulett is secured,” the sugar cane growers said in a statement made available to The Bulrushes.
“If an unfunded liquidation proceeds, the growers supplying Tongaat’s three mills, as well as the entire industry, will face immediate non-payment for cane, levies, and other legislated funding requirements.
“Operations at the mills will immediately cease, and many growers in the Tongaat-serviced areas will immediately lose access to the only mechanism to process their sugarcane.
“Because sugarcane must be milled soon after harvesting to ensure a viable yield and due to the distance to other mills, it will leave vast amounts of this season’s sugarcane unmilled.”
The SA Canegrowers also warned that liquidation may also mean that Tongaat will be prevented from selling its existing stock of refined sugar to manufacturers and retailers, which immediately stops critical cash flow to the company’s operations, thereby all but ensuring the underlying asset value is diminished.
“The underlying value of the company rests in functional, operating assets – mills that are running, cane that is being processed, and a supply of refined sugar that flows to the market,” said Dr. Thomas Funke, CEO of SA Canegrowers.
“If this operational continuity is not secured, the consequences will extend far beyond one company.
“The entire South African sugar value chain, starting with growers and flowing through to workers, transporters and downstream industries, will be severely destabilised.”
Higgins Mdluli, chairman of SA Canegrowers, stated: “Ensuring continuity of milling operations at Tongaat and protecting grower income must be an urgent priority for the government and the business rescue practitioners of Tongaat, irrespective of the eventual ownership outcome.
“Tongaat’s liquidation will affect all of South Africa’s 27 000 small-scale and 1,100 large-scale growers.”
The critical importance of Tongaat Hulett’s operations to South Africa’s economy and the stability of rural communities is hard to overstate.
Tongaat Hulett operates three sugar mills and is the country’s only refiner of white sugar, used in beverages, biscuits, and confectionery.
The potential liquidation of Tongaat also comes at a time when the local sugar industry is battling with unprecedented sugar imports, displacing local sugar from retailers and food and beverage manufacturers.
“The South African sugar industry is already under immense pressure – from the surge of deep-sea imports displacing locally grown sugar, to the continuation of the Health Promotion Levy, a policy for which no credible evidence of effectiveness has been presented,” said Mdluli.
“In such a fragile environment, the loss of three of South Africa’s 12 remaining sugar mills will be a death knell for the industry.”
SA Canegrowers said it stands ready to work with all stakeholders to safeguard milling capacity, protect growers, and secure the long-term sustainability of the industry.
