SOUTH AFRICA – Gledhow Sugar Company (GSC) has entered a voluntary business rescue proceeding, becoming the latest blow to the financially troubled South African sugar sector, putting the livelihood of employees and cane growers on the line.
Business rescue is a legal process aimed at facilitating the rehabilitation of a financially distressed company.
The board of GSC last week announced that it had passed a resolution discussed in the meeting held on March 10 to voluntarily commence business rescue proceedings.
The shareholders of the company comprise a consortium of Ushukela Milling (34.9%), Illovo Sugar (South Africa) (30%), the Gledhow Growers Share Trust (25.1%), and Sappi Southern Africa (10%).
Gledhow’s business rescue follows a few years of difficulty the facility had to endure, which included, the forced closure of its factory due to the unrest in KwaZulu-Natal in July 2021 and catastrophic flood damage to its machinery and infrastructure in April last year.
This has been compounded by the associated inflationary costs of inputs and coal, caused as a result of the ongoing war in Ukraine, the company said in a statement posted on its website.
“These challenges have resulted in the company becoming “financially distressed” as defined in section 128 of South Africa’s Companies Act, 2008.
“As a result, the board of directors believes that initiating business rescue proceedings is in the best interests of the company and has agreed that a solid business turnaround plan will be developed over the coming months to ensure the company’s sustainable operations,” said the company.
The industry body, the South African Cane Growers Association (SA Canegrowers) said the Gledhow sugar mill situation is a testament to the sugar industry’s growing distress, and signals the need for urgent intervention to prevent the crisis from deepening.
The industry body noted it is engaging extensively with the mill’s management, the South Africa Sugar Association, and growers on the way forward.
The board of directors of the company assured all affected persons, including the staff, that paying staff salaries and allowing the business to keep producing sugar is a top priority.
Additionally, cane payments, production, and maintenance costs are also the highest priority to be covered.
Per the Gledhow Sugar Mill website, the mill directly employs 374 people, while South African Canegrowers Association figures indicate that more than 245 growers sell their crops to the mill and employ more than 3 400 workers from surrounding communities.
The growers who serve the Gledhow mill produce more than 1.1 million tons of sugarcane a year, about 6% of the industry’s total output.
When Tongaat Hulett placed its South African operations into business rescue in October 2022, it caused an acute crisis in the sugar industry, including delays in grower payments and uncertainty about the future of sugar milling operations on the north coast of KwaZulu-Natal.
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