Tongaat Hulett: JSE Delisting Confirmed Amid Business Rescue

• Tongaat Hulett will be delisted from the Johannesburg Stock Exchange on November 3, with no payout for shareholders.
• The company has been in a court-supervised business rescue process since October 2022.
• A R2.5-billion funding facility from the Industrial Development Corporation, which covered salaries, expired on September 30 but has since been extended until November 30, 2026.
• Workers recently ended a nearly four-week strike, securing a 6% pay increase backdated to April.
• Restructuring, sale, or winding-up are all possible outcomes, meaning Tongaat Hulett will cease operating its current businesses.

Lawyers advising creditors, shareholders, or employees of Tongaat Hulett must closely monitor the business rescue practitioners' next steps, particularly regarding the announced delisting from the JSE and the expiration of the IDC funding, as these indicate a high likelihood of restructuring, sale, or winding-up with significant implications for all stakeholders.

Tongaat Hulett, the prominent sugar producer, is set to be delisted from the Johannesburg Stock Exchange (JSE) on November 3, marking a significant development in its ongoing business rescue process. This move comes as the company continues under court-supervised administration, a status it has maintained since October 2022. The delisting signifies that shareholders will not receive any payout, and the company's shares have remained untraded since 2022, underscoring the severe financial distress.

Adding to the company's precarious position, a crucial R2.5-billion funding facility from the state-owned Industrial Development Corporation (IDC) expired on September 30 but has since been extended until November 30, 2026. This facility had been instrumental in covering essential operational costs, including employee salaries. Despite these challenges, the business rescue practitioners affirmed to News24 on October 2 that operations are proceeding as usual.

These financial and structural shifts occur against the backdrop of recent labor unrest. Just last month, Tongaat Hulett employees concluded a nearly four-week strike, ultimately securing a 6% pay increase. The resolution of this industrial action, while providing a temporary reprieve for workers, highlights the complex environment in which the company's future is being determined.

The JSE delisting of Tongaat Hulett on November 3 is a direct consequence of its prolonged business rescue status, initiated in October 2022. This court-supervised process aims to rehabilitate financially distressed companies, but in Tongaat's case, it has led to the cessation of share trading since 2022 and the confirmation that existing shareholders will not receive any compensation. This outcome is a stark indicator of the company's deep financial troubles and the challenges faced by the business rescue practitioners.

A critical component of the business rescue plan involved the R2.5-billion funding provided by the Industrial Development Corporation. This state-owned lender's support was vital for maintaining day-to-day operations, including ensuring that salaries could be paid. The expiration of this funding on September 30, without any public announcement of its renewal, introduces considerable uncertainty regarding the company's ability to sustain its current operational model. Lawyers advising creditors, shareholders, or employees of Tongaat Hulett must closely monitor the business rescue practitioners' next steps, particularly regarding the announced delisting from the JSE and the expiration of the IDC funding, as these indicate a high likelihood of restructuring, sale, or winding-up with significant implications for all stakeholders.

The company itself has acknowledged that a restructuring, a sale of its assets, or a complete winding-up remain distinct possibilities. Each of these scenarios would result in Tongaat Hulett ceasing to operate its current businesses. While Vision Group chairman Robert Gumede stated in June that widespread retrenchments would be avoided and factory jobs secured, while the business rescue plan involving the sale of its assets to the Vision consortium has been adopted, no specific takeover date has been announced, leaving the long-term fate of the company and its workforce uncertain.

The recent labor dispute at Tongaat Hulett saw approximately 5,778 workers, represented by the Association of Mineworkers and Construction Union (AMCU), engage in a strike that commenced on August 17. The workers initially sought a 13% pay increase, alongside a R1,000 transport allowance and a R1,500 housing allowance. The employer's initial offer stood at 5.4%, leading to a nearly four-week standoff.

The strike concluded on September 9, with workers accepting a 6% pay increase, which was backdated to April. The back pay was scheduled for disbursement by September 18, and the company also agreed to compensate employees for six of the strike days. Notably, the final settlement did not include the transport or housing allowances initially demanded by the workers. This resolution, while ending the immediate industrial action, occurred amidst rising living costs, with petrol prices for 95 octane increasing by R3.33 per litre on October 7.

The ongoing business rescue, coupled with the JSE delisting and the expiry of the IDC funding, creates a highly uncertain future for Tongaat Hulett's employees. Despite assurances from Robert Gumede in June regarding job security and the avoidance of mass retrenchments, the potential for restructuring, sale, or winding-up means significant changes are on the horizon. The absence of a clear takeover date or a detailed post-rescue plan means all stakeholders, especially the workforce, face a period of considerable anxiety regarding their employment and the company's ultimate fate.

Lawyers advising creditors, shareholders, or employees of Tongaat Hulett must closely monitor the business rescue practitioners' next steps, particularly regarding the announced delisting from the JSE and the expiration of the IDC funding, as these indicate a high likelihood of restructuring, sale, or winding-up with significant implications for all stakeholders.

Source: Original reporting based on AllAfrica news.