Farmer’s Weekly reported in June that Tongaat Hulett (THL) had narrowly avoided provisional liquidation after the company’s business rescue practitioners (BRPs), the Industrial Development Corporation (IDC), and the Vision Consortium (Vision) reached an agreement aimed at implementing the adopted business rescue plan.
The liquidation application was subsequently withdrawn, while IDC support was extended to keep the business operating. However, the reprieve has not resolved THL’s financial difficulties.
ConCourt closes one legal avenue
In an effort to preserve its cash flow and give the business rescue process a better chance of success, THL’s BRPs previously sought to temporarily suspend certain levy payments to the South African Sugar Association (SASA).
After the High Court and Supreme Court of Appeal ruled against THL’s position, the company sought to appeal their decision in the Constitutional Court (ConCourt).
However, on 24 August, the ConCourt refused Tongaat Hulett’s application for leave to appeal in its long-running dispute with SASA over the unpaid industry levies.
At the heart of the case was an attempt by THL’s BRPs to temporarily stop paying certain levies owed to SASA while the company was in business rescue.
The dispute centred on whether the Companies Act (No. 17 of 2008) allowed the BRPs to suspend THL’s payment obligations under the Sugar Industry Agreement during business rescue.
In its latest ruling, the ConCourt condoned THL’s late filing of an application for leave to appeal and permitted the company to submit a replying affidavit.
However, the court found that there was no realistic possibility that THL would succeed with the appeal.
“There are no reasonable prospects of success on the merits of the application for leave to appeal. Therefore, leave to appeal must be refused with costs,” the judgment said.
In a notice dated 27 August, the BRPs said they were consulting their legal counsel and relevant stakeholders to determine what the ruling means for the business rescue process.
“It would therefore be premature to comment on any payment implications, quantum [the amount that may ultimately be payable], or timing at this stage,” they said.
The ruling closed THL’s latest attempt to challenge its legal position on the disputed payments, while the company continues to deal with its wider financial issues.
Levy claim remains
SASA CEO Sifiso Mhlaba said that out of a total R1,5 billion in statutory sugar industry levies, THL still owed the association R517 million.
Speaking to Farmer’s Weekly, he said SASA was seeking legal advice on when the outstanding amount should be paid, but that the debt should be dealt with in accordance with THL’s adopted business rescue plan.
According to Mhlaba, SASA had recovered part of the R1,5 billion at the end of March 2023 and confirmed that THL had been paying industry levies since 1 April 2023.
The levy dispute stems from the BRPs’ decision to suspend certain payments to SASA from 28 October 2022 to 1 April 2023.
The BRPs said in a statement that continuing to make the payments at the time could have left the company without enough money to operate and could have pushed it into financial collapse.
“If these payments had been made at that time, there was a strong possibility of the company running out of funds and being forced to go into liquidation,” they said.
They confirmed that payments to SASA had resumed in April 2023, adding that sugar cane growers had been paid all amounts owed to them to date since the start of the business rescue process.
A dispute going back four years
The matter dates back to September 2022, when THL stopped making some of the payments required under the Sugar Industry Agreement.
By January 2023, the company said it could not meet upcoming payments for levies, interest, and other industry obligations.
SASA disagreed and maintained that THL was still legally required to make the payments.
The dispute put further pressure on THL’s finances when SASA withheld export proceeds that would otherwise have been paid to the company.
SASA later demanded more than R176 million in unpaid industry levies. THL argued that, because it was in business rescue, it had the right to temporarily suspend these payments.
The dispute raised concerns about the impact on the wider sugar industry, including growers and other millers who rely on the industry’s system of collecting and redistributing funds.
In December 2025, the Supreme Court of Appeal found against THL’s position, and the company then approached the ConCourt to appeal that decision.
Growers facing delayed payments
While THL’s legal battles continue, the company’s liquidity problems are being felt directly by growers.
In a separate letter to growers, THL CEO Gavin Dalgleish said the company was being forced to delay a portion of its August cane payments because of its cash position.
“Unfortunately, current liquidity constraints require a temporary adjustment to the timing of a portion of the August cane payment,” he said.
Dalgleish attributed the financial pressure mainly to weaker cash inflows, driven by depressed domestic sugar sales that he noted were significantly undercut by a continuous influx of sugar imports.
The total August cane payment amounts to R675 million and is being paid in four tranches.
The first R180 million, which was due on 28 August, covered all amounts owing to small-scale growers, as well as about 20% of the amounts due to commercial and other growers. It also included about R7 million in SASA-funded support payments.
A further R300 million was due on 31 August, followed by R100 million due on 8 September, and the remaining R95 million on 14 September.
Funding remains critical
The payment delay underscores the business rescue’s dependency on additional funding.
Dalgleish said THL had been pursuing various funding initiatives, but that no additional funding linked to proposed facilities being discussed with Vision and the IDC had yet been approved or made available to fund the August cane payments.
He added that the funding was unlikely to become available before the closing of Vision’s transaction set out in the business rescue plan. Thus, THL was having to manage its available cash carefully while keeping its mills operating.
Dalgleish explained that the arrangement was intended to “manage available liquidity while preserving operational stability and supporting continued milling and production activities”.
He said additional facilities were expected through Vision’s banking partners once the transaction had closed, cautioning, however, that both the timing of the closing and the availability of funding remained subject to conditions outside of THL’s control.
Dalgleish acknowledged the pressure that the revised payment schedule would place on farming operations.
“We recognise and regret the impact that this adjustment will have on growers.”
He concluded that THL remained focused on maximising cash generation, improving sales, collecting outstanding amounts, and securing additional liquidity.
