Robert Gumede’s Vision Group has secured overwhelming approval for its bid to rescue the financially distressed JSE-listed sugar producer and property developer. The approval was described by Tongaat Hulett’s business rescue practitioners (BRPs) as “a great milestone.” However, uncertainties loom over the funding for the business rescue plan, the Industrial Development Corporation’s (IDC) continued role, and the recapitalization of Tongaat’s balance sheet.

The IDC, which has provided R2.3 billion in post-commencement funding (PCF) to Tongaat, has expressed concerns about the security for this facility being partially depleted. The corporation has set a deadline of 26 January 2024, by which it requires additional security for its PCF facility, or it could demand immediate repayment. The lack of clarity on an agreement between the IDC and Vision regarding the extension or increase in the PCF funding has led to delays in the voting process.

RGS Group Holdings, a bidder that withdrew from the process, sought clarity on any agreement between the IDC and Vision regarding future funding for Tongaat. The BRPs’ lawyer, Danny Andropoulos, stated that they are not aware of any arrangements between Vision and the IDC but acknowledged ongoing discussions. He emphasized the urgency of concluding security arrangements within a limited timeframe.

While the approval of Vision’s business rescue plan is considered a significant milestone, Trevor Murgatroyd, a director of BRPs Metis Strategic Advisors, cautioned that it is not the end of the road. Acknowledging the challenges faced during the business rescue process, Murgatroyd highlighted the need for continued collaboration with employees, suppliers, IDC, and Vision to efficiently implement the approved plan.

Analyst and investor David Woollam emphasized that the adoption of the Vision plan is not a conclusion but the beginning of a challenging phase. He pointed out that the balance sheet remains weak, funding arrangements with the IDC need resolution, and operational improvements are crucial. The business rescue practitioners must navigate legal and statutory obligations to implement the plan.

During the voting process, 91.91% of accepted creditor claims exercised their right to vote, with 98.51% voting in favor of the plan. The Vision business rescue plan involves the acquisition of Lender Group claims, conversion of debt into equity, shareholders retaining a 2.7% interest, renegotiation of working capital facilities, and payment of 100c in the rand to the SA Sugar Association.

Tongaat Hulett, placed in business rescue on October 27, 2022, faced the move after lenders rejected its proposed restructuring plan. With Vision’s bid gaining approval, attention now turns to resolving funding uncertainties and implementing the business rescue plan effectively.