SOUTH AFRICA – The Durban High Court has reaffirmed its ruling ordering sugar producer Tongaat Hulett to settle outstanding levies owed to the South African Sugar Association (SASA).
The court’s decision underscores the critical importance of these payments to the economic sustainability of sugarcane farmers and the livelihoods they support.
Judge Rashid Vahed, presiding over the case, reiterated the statutory nature of the Sugar Industry Agreement (SIA) and emphasized that payments due under it must be honored, regardless of Tongaat’s business rescue status.
This ruling follows an initial December judgment mandating Tongaat to pay the levies, which was later challenged by the company’s business rescue practitioners (BRPs) in an appeal that has now been dismissed.
The court’s decision was welcomed by industry body SA Canegrowers, which emphasized the vital role of the SIA in ensuring equitable distribution of proceeds from local sugar production among growers, millers, and refiners.
The sugar levy paid to SASA forms part of a redistributive mechanism aimed at ensuring fairness in a highly regulated industry where larger mills subsidize smaller players.
Judge Vahed emphasized the unity within the sugar industry regarding the importance of honoring financial obligations under the SIA.
His ruling mandates Tongaat to pay the outstanding amount of R526 million owed to the industry, a move aimed at protecting growers and safeguarding their livelihoods.
While Tongaat’s BRPs may still explore further legal avenues, including potential appeals to higher courts, SA Canegrowers expressed hope that Judge Vahed’s ruling will bring closure to the issue.
The overdue payments have posed significant risks to sugarcane farmers and millers who have had to compensate for Tongaat’s nonpayment.
Tongaat’s financial challenges date back to October 2022 when the company entered business rescue due to financial mismanagement and misconduct by former executives.
Since then, Tongaat has undergone debt restructuring and management changes, with a chief restructuring officer appointed to oversee the process.
Earlier this year, Tongaat’s creditors approved a comprehensive business rescue plan submitted by Vision Partners.
The plan involves acquiring Lender Group claims and security totaling approximately R8 billion, with about R4.1 billion of these claims to be converted into new equity in Tongaat Hulett Limited.
Under the proposed agreement, Vision Partners is set to secure a 97.3 percent ownership stake in Tongaat Hulett, while existing shareholders will retain a 2.7 percent interest following the debt-to-equity conversion.
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