THL shareholders voted against the debt to equity swap last week. Picture: Supplied
By Sizwe Sama Yende
A consortium that has taken over ailing sugar giant Tongaat Hulett Limited (THL) was allegedly approached by a shareholder to pay US$32 million (R580 million) in exchange for its vote.
According to industry sources with insight into the matter, a new shareholder who had acquired a stake from one of THL's original shareholders approached the Robert Gumede-led Vision Investments with the offer before shareholders voted on Vision's debt to equity swap proposal on Thursday, August 8.
Vision rejected the approach, viewing it as extortion. THL shareholders voted against the debt to equity swap last week.
This leaves Vision to move forward with its plans without the legacy obligations of the company's troubled past.
The shareholders had two options: vote for the debt to equity swap and retain 2.7% of the JSE-listed shares, or reject it. They chose the second option, which left them empty-handed.
Two industry sources close to the THL saga blamed a certain shareholder, whose name is known to People's Eye, as the chief antagonist in the blocking of a better future for the company, its stakeholders, shareholders, sugarcane growers and employees.
"Does he actually care an iota as to what happens to all other stakeholders in Tongaat Hulett? THL accumulated the R8.5bn debt under the watchful eye of the same shareholders who voted against the Lender of record (Vision) trying to broker a win-win solution for all stakeholders,” said a source.
The resistance against Vision’s take over manifested when Vision was informed that that a party has acquired 15% shareholding of Rudlands. People's Eye understands that the new shareholder called Vision and demanded US $32million (R600million) to vote in favour of the THL Business Rescue resolutions .
Vision rejected the proposal as an extortion because the THL’s shares as per the business rescue and approved business plan are worth minus zero.
Mozambican company, RGS Holdings, which faces fraud charges for allegedly falsifying an ABSA proof of funds worth R2billion is seemingly not giving up as People's Eye has seen another letter from RGS proposing to inject R8.5billion into THL subject to RGS. RGS claims to have funding from Afreximbank.
RGS has been accused of hiring THL creditor, Powertrans’ court application to collapse the THL business rescue.
The debt to equity swap would have thrown THL a lifeline and prepared ground for it to move out of business rescue, stay listed on the JSE and embark on a path of profitability and stability, preserving jobs in all jurisdictions - Botswana, Zimbabwe, Mozambique and South Africa.
On Thursday, after the shareholders’ vote, Vision Investments — a consortium made up of mogul Robert Gumede’s Guma Agri, Rute Moyo of Remoggo, Amre Youness of Terris Sugar and Nauman Khan of Almoiz — revealed its way forward.
The company said that debt for equity swap would result in THL being recapitalised with a much stronger balance sheet to exit business rescue and grow.
“Although we are disappointed that the current shareholders will ultimately no longer participate in the business, we have no regrets with the process that has been followed as THL’s current shareholders exercised their democratic right when it came to the first option available to the business rescue practitioners to execute the approved Vision Business Rescue plan,” said Vision Investments.
Vision Investment said that the shareholders’ vote would not stop the implementation of the plan that THL creditors approved in January 2024.
“Furthermore, the South African Competition Tribunal recently approved Vision's acquisition of THL,” the company added.
Vision said that it would use its right to conduct a debt for asset swap of all THL assets that are included in the current debt package linked to the R8.6 billion of secured debt.
“This second option allows us to move forward with a new unlisted entity, giving Vision a fresh start without any legacy obligations. With all assets, including the THL brands, in a new unlisted company owned 100% by Vision, we will honour the Tribunal’s ruling that includes taking over the THL staff and supporting the small-scale growers.”
According to the approved plan, Vision will pay unsecured creditors R75 million as a gesture of goodwill.
Vision has indicated that it intended diversifying THL and expansion into energy generation (Ethanol & Electricity from bagasse) to alleviate energy supply challenges and costs.
The source said that chief antagonist’s attempt to minimise the value of the debt owed to the lenders did not absolve the company of its obligation.
"He and his associates have had five and half years to put their money where their mouths are and they have failed to do so, including at the shareholders meeting on Thursday. All he has done is make accusations and criticise concrete proposals and now they have run out of runway," he said.
Added the source: "He is attempting to rule from the grave. He is trying to behave like a creditor by revising the terms of the creditor approved plan while trying to propose another business plan when he has no standing now - he voted himself out of that yesterday (Thursday). The law is clear that the company is in business rescue because it cannot meet its obligations to its creditors. There is a valid and continuing BR plan and Vision is contracted to execute it and will now do so without the shackles and whims of shAnother source clarified that Vision, together with IDC, were the only entities that have put good money to assist all the bad money in the troubled sugar company.
"Everyone is happy to acknowledge the role that this particular shareholder played in unearthing the fraud at THL, but we are now in a situation where THL livelihoods are being threatened each day that the saga stretches out,” he said.
The source said this shareholder and his ilk said nothing when when Tanzanian company, Kagera, was chosen as the approved bidder last year even though there was fraud involved.
He dismissed claims that Vision had no money for the transaction. "They would like everyone to believe that a consortium of 11 SA lenders would allow Vision to access the debt package and convert it when they were not invested in it. It would seem that they have no respect for entrepreneurs like Robert Gumede, Rute Moyo, Nauman Khan and Amre Youness.”
People's Eye