As Tongaat Hulett faces financial turmoil, Minister of Trade and Industry Parks Tau confirmed that the IDC has provided R2 billion in funding to protect the sugar cane industry.
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Minister of Trade and Industry, Parks Tau, has revealed that the Industrial Development Corporation (IDC) has provided over R2 billion in support to Tongaat Hulett as the troubled sugar producer struggles with significant financial challenges.
Tau was responding to a parliamentary question from Umkhonto weSizwe Party (MK Party) Member of Parliament, David Sikhosana, who asked the minister about the government’s interventions to prevent a major collapse of the sugar cane industry, its value chain, and the potentially devastating loss of hundreds of thousands of jobs.
In his reply, Tau acknowledged the gravity of the situation, stating that the crisis at Tongaat Hulett posed a significant threat to the broader sugar industry and surrounding communities, particularly in KwaZulu-Natal and Mpumalanga.
"The challenges facing Tongaat Hulett are of serious national concern, given the company’s central role in South Africa’s sugar cane industry and the extensive socio-economic impact across KwaZulu-Natal, Mpumalanga, and surrounding rural economies," Tau said.
Tau said since October 2022, the IDC has been actively involved in attempts to save the company, working alongside business rescue practitioners, the company’s management, and other stakeholders to keep the company afloat.
"The IDC has, since October 2022, worked consistently and in good faith with the Business Rescue Practitioners, Tongaat Hulett management, lenders, shareholders, and government stakeholders to support business continuity and pursue a viable, going concern outcome," Tau said.
According to Tau, the IDC has provided significant financial support to the company, providing more than R2 billion in post-commencement funding to ensure that operations could continue while the business rescue process was underway.
"The IDC provided significant post-commencement funding of more than R2 billion to support ongoing operations, the business rescue process, and the protection of jobs, growers, and the broader sugar value chain," he said.
However, the business rescue process has faced hurdles, including the failure to secure key sale agreements that were seen as crucial to the company's recovery.
In light of this, the Business Rescue Practitioners (BRPs) filed for provisional liquidation. Tau confirmed that the IDC has since taken steps to prevent liquidation and ensure that the company stays in business rescue.
"The IDC has written to the BRPs to withdraw its conversion application from business rescue to liquidation and to reinstate Tongaat Hulett into Business Rescue," he said.
He further stated that the IDC is working on long-term solutions to help Tongaat Hulett exit the business rescue process and continue operations sustainably.
"Additionally, the IDC is actively developing sustainable solutions to allow the business to exit Business Rescue within a reasonable time frame, in the case where the BRPs withdraw the liquidation application," Tau added.
Should the liquidation process move forward, Tau said that the IDC would take legal steps to oppose it.
"In the event the BRPs refuse to withdraw the liquidation application, the IDC will oppose the provisional liquidation proceedings in order to prevent operational collapse and safeguard the broader sugar economy," he said.
The minister also emphasised that the government is committed to finding a solution that protects jobs and the livelihoods of sugar cane farmers.
"Government remains fully seized with this matter, committed to preventing a systemic collapse of the sugar cane industry, and focused on securing a sustainable resolution that safeguards jobs, supports growers, and preserves the integrity of South Africa’s sugar value chain," Tau said.
Tau said the government would continue to monitor developments and keep parliament informed on any progress regarding the crisis.
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