{"id":28463,"date":"2023-12-13T06:00:00","date_gmt":"2023-12-13T04:00:00","guid":{"rendered":"https:\/\/amabhungane.org\/?p=28463"},"modified":"2024-09-11T15:01:40","modified_gmt":"2024-09-11T15:01:40","slug":"tongaat-hulett-bidder-in-scathing-attack-on-business-rescue-process","status":"publish","type":"post","link":"https:\/\/further.co.za\/amabwp\/tongaat-hulett-bidder-in-scathing-attack-on-business-rescue-process\/","title":{"rendered":"Tongaat Hulett bidder in scathing attack on business rescue process"},"content":{"rendered":"\n

Leaked letters have blown the lid off backroom battles that Tongaat Hulett rescue bidder RGS alleges show that the business rescue practitioners (BRP\u2019s) have attempted to sideline them in favour of a rival bid led by IT mogul Robert Gumede.<\/p>\n\n\n\n

The allegations amount to claims that the BRP\u2019s acted contrary to the best interests of Tongaat Hulett Limited (THL) and its creditors by frustrating efforts by Mozambique based RGS to make an offer for the distressed company \u2013 an offer that appears better for all concerned than others the BRP\u2019s have been pursuing.<\/p>\n\n\n\n

And, in the latest drama surrounding the business rescue process, RGS has launched an urgent application to force the BRP\u2019s to table their bid for a vote by creditors, arguing that Gumede\u2019s consortium has failed to raise the necessary cash.<\/p>\n\n\n\n

Tongaat Hulett was placed in business rescue in October 2022 after a new management team uncovered accounting failures and alleged fraud that led the company to a R12-billion reversal in valuation. Business rescue is an alternative to liquidation for companies in distress that might be saved by a combination of new investment and a compromise of debts owed to creditors. <\/p>\n\n\n\n

In papers published on the Tongaat Hulett website yesterday (Tuesday 12 December 2023) RGS seeks a court order compelling the BRP\u2019s to proceed with a creditors meeting this Thursday, 14 December 2023, to vote on an amended RGS rescue plan.<\/p>\n\n\n\n

The amendments are necessary to take account of last week\u2019s Durban high court ruling that the BRP\u2019s acted unlawfully in withholding payment by Tongaat Hulett of sugar industry levies of almost R2-billion due to the SA Sugar Association (SASA).<\/p>\n\n\n\n

The creditors\u2019 vote on two published rescue plans \u2013 that of RGS and a competing plan of Gumede\u2019s Vision Investments consortium (previously named Terris) \u2013 was due to have taken place on Friday 8 December but the timetable was torpedoed by the court judgment on the levies.<\/p>\n\n\n\n

For the full background, read Who is behind the Tongaat Hulett bid battle?<\/a><\/strong><\/p>\n\n\n\n

Initially, the BRP\u2019s were insistent that the creditors vote must take place on Thursday the 14th<\/sup>.<\/p>\n\n\n\n

Now the BRP\u2019s want it postponed to January. RGS alleges that this is intended purely to give Gumede more time to raise money, whereas their bid is funded and ready to go.<\/p>\n\n\n\n

In their court papers RGS also take aim at the Lender Group of banks which holds some R7.7-billion of Tongaat Hulett debt and was poised to do a deal to sell their claims to Gumede\u2019s Vision consortium, allowing him to take control of the business rescue vote by taking their place as the dominant creditor.<\/p>\n\n\n\n

RGS disclosed a copy of the agreement between the banks and Gumede\u2019s Vision Investments 155 which would have seen the Vision consortium take over the claims at a discounted price of R3.51-billion.<\/p>\n\n\n\n

But it also shows that the agreement would terminate if Vision failed to make payment by noon South Africantime on 6 December 2023.<\/p>\n\n\n\n

Vision failed to make payment and amaBhungane understands that this was because the board investment committee of the Public Investment Corporation (PIC) resisted pressure to advance R2-billion, citing concerns about the reputational risk of preempting a fair rescue bid process.<\/p>\n\n\n\n

In their application RGS claims they were informed by the Lender Group at a meeting on 7 December that the Vision Agreement had lapsed and no new agreement had been concluded.<\/p>\n\n\n\n

Lawyers for the Vision consortium did not respond to questions about the PIC\u2019s involvement and their efforts to find other funders, which were rumoured to have included an approach to Zimbabwe\u2019s notorious Rudland family. Prior to the business rescue this family had launched a failed bid to take over Tongaat Hulett.<\/p>\n\n\n\n

After deadline the lawyers for Vision sent this response: “It is well known that some of the Vision parties are Zimbabwean, and others have business interests in Zimbabwe, so they do travel to Zimbabwe often. A simple fact check would have revealed that Vision parties in 2021 had a THL board approved deal to purchase THL\u2019s Zimbabwe and Botswana operations. This SA and Zimbabwean consortium deal was scuttled by the Rudlands\u2019 backed THL rights offer at the last minute. We respect the Rudlands\u2019 family as any other but there is no direct or indirect relationship with them on this deal or any other. However, it is important to note that neither any of Vision\u2019s members have ever had the pleasure of meeting the Rudlands, their management or advisors. This allegation is a fabrication.”<\/p>\n\n\n\n

They also noted, “We do not have a deal with the PIC, nor have we been promised therefore our plan is not depended on the PIC. We can confirm that Vision has an agreement with the Lender Group that is conditional on Vision\u2019s plan being adopted by creditors. We are looking forward to the creditors meeting on 14 December. We are ready to present and support our plan.”<\/p>\n\n\n\n

The PIC also failed to answer questions about its decision, merely saying, \u201cThe PIC is not collaborating with any party in this regard.  Any interpretation of the PIC\u2019s position as a shareholder of Tongaat Hulett outside of the business rescue process would be speculative until a business rescue plan is presented and approved by the required majority of creditors, both in number and in value, at a duly constituted creditors meeting in terms of the requirements of the Companies Act. Currently, the meeting is scheduled for the 14th<\/sup> of December 2023.\u201d<\/p>\n\n\n\n

In their urgent application to compel the meeting to go ahead on the 14th, RGS argued that the BRP’s support of yet another adjournment until January was \u201cbizarre\u201d in circumstances where the RGS Plan was \u201cfully funded and capable of adoption at the Meeting on 14 December 2023, and immediate implementation\u201d.<\/p>\n\n\n\n

RGS stated, \u201cThe BRP\u2019s (and the Lender Group) should not be choosing sides between RGS and the Vision Parties\u2026 The Vision Parties have still not secured the necessary funding and it is inconceivable that the BRP\u2019s should now be attempting to adjourn the Meeting to provide the Vision Parties with more time to secure the funds they need to acquire the Lender Claims.\u201d<\/p>\n\n\n\n

RGS said the BRP\u2019s, \u201cin promoting and favouring the Vision Plan,\u201d were attempting to facilitate the Lender Group’s desire to escape their exposure to Tongaat Hulett.<\/p>\n\n\n\n

\u201cIt is submitted that the BRP\u2019s’ conduct has created a reasonable impression that they are conducting the THL Business Rescue solely for the benefit of the Vision Parties and \/ or the Lender Group,\u201d RGS argues.<\/p>\n\n\n\n

That claim is consistent with the history of previous interactions set out in the leaked letters between RGS and the BRP\u2019s.<\/p>\n\n\n\n

The letters suggest that:<\/p>\n\n\n\n