TONGAAT Hulett Limited’s (Tongaat) ZAR5,9 billion (US$330,05 million) sale to South Africa’s Vision Group is teetering on the brink after business rescue practitioners filed an urgent High Court application to liquidate the embattled agri-processing giant, a dramatic twist that could ripple through Triangle Limited and Hippo Valley Estates Limited (Hippo).
Tongaat, a South African agriculture and agri-processing firm, operates in Zimbabwe through Triangle Limited and Hippo, with the latter listed on the Zimbabwe Stock Exchange.
The group entered voluntary business rescue in October 2022 after debt claims ballooned to about ZAR13 billion (US$721,6 million), later confirmed at ZAR10,4 billion (US$634,53 million) in a recent South African court judgment.
In January 2024, following a lengthy bidding process, Vision Group emerged as the preferred rescuer under a ZAR5,9 billion (US$330,05 million) debt-to-asset transaction meant to stabilise Tongaat and settle part of its obligations.
But in an urgent chamber application filed at the South African High Court on Thursday, the business rescue practitioners moved to place Tongaat into liquidation, even as it retains a 50,3% controlling stake in Hippo through its wholly-owned subsidiary, Triangle Limited.
“This application is premised on the obligations of the BRPs (business rescue practitioners) as set out in Section 141(2) of the Companies Act, as set out above,” Metis Strategic Advisors (Proprietary) consultant Gerhard Conrad Albertyn, one of the three appointed Tongaat BRPs, said.
Keep Reading
- Tribunal to settle sugar milling dispute
- Inaugural Zim investor indaba highlights
- Stop clinging to decaying state firms
- ZB explores options to tackle inflation
“The BRPs have concluded, on objective grounds, that there is no longer a reasonable prospect of rescuing Tongaat and accordingly we have instituted this application, as we are obliged to do, for an order in terms of which the business rescue proceedings of Tongaat are discontinued and the company is placed into provisional liquidation as envisaged in terms of Section 132(2)(a)(ii) read together with Section 141(2) of the Companies Act.”
If the High Court grants the liquidation order, control of Tongaat’s assets would shift from the business rescue practitioners to court-appointed liquidators, effectively collapsing the existing rescue framework under which Vision intended to acquire the group as a going concern.
Such a development would likely derail the planned debt-to-asset transaction and reset the entire sale process, leaving creditors and potential investors scrambling for clarity.
Triangle Limited would fall directly into the liquidation estate. Liquidators could then move to dispose of the Zimbabwean operation, either as a standalone asset or bundled with other units, to maximise recoveries for creditors.
Triangle’s 50,3% controlling stake in Hippo would consequently come under scrutiny, raising the prospect of a change in control at the ZSE-listed sugar producer.
That scenario could unsettle minority shareholders and inject fresh uncertainty into funding and operational stability across both Zimbabwean businesses.
“There is no longer a possibility of continuing to implement and therefore achieve substantial implementation of Tongaat’s approved business rescue plan, nor is there any longer a reasonable prospect of the company being rescued within the meaning of Section 128(1)(b) and (h) of the Companies Act,” Albertyn said.
“Tongaat does not have access to requisite further funding and, critically, does not have certainty in respect of the refinancing or restructuring of the existing post-commencement funding ("PCF") facility, which is required to restore a sustainable capital structure and to enable Tongaat to continue to fund, inter alia, its continued operations and working capital requirements.”