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Consortium Led by Robert Gumede Acquires Struggling Sugar Company, Tongaat Hulett

Published November 06, 2023
1 years ago

In a notable turn of events, Tongaat Hulett, the sugar company stricken by financial turmoil, has been salvaged from collapse by a consortium led by renowned businessman Robert Gumede. This follows the closure of the firm's business rescue proceedings, a situation that not only stabilizes the company's financial footing but could also retain thousands of jobs.


According to publications from City Press, it was indeed Terris Consortium, led by Gumede, that finalised the purchase from 12 banks which held a combined claim of approximately R8 billion against Tongaat Hulett. The Terris Consortium comprises several notable business magnates including Rutenhuro Moyo from Zimbabwean company, Remoggo; Amre Youness of Samancor; Nauman Khan from Pakistan's Almoiz Industries and Pepsi Bottling; along with entities from Gumede’s own, Guma Africa Group.


Terris Sugar, a subsidiary of Terris Consortium inked the deal on Friday, 3rd November, wrappping up Tongaat's business rescue process which had been in progress since October 2022. With this acquisition, jobs across South Africa, Zimbabwe, Mozambique, and Botswana are slated for preservation, marking a significant event in the business community.


The Tongaat Episode


Founded in 1892, Tongaat Hulett - with its four mills in South Africa - had the capability to manufacture over 1 million tons of sugar annually. In 2021, the company reported its workforce at approximately 22,927 employees. 2019, however, marked a rather tumultuous period for the company, with a multi-billion reporting scandal implicating some of its executives for misstating accounts, declaring inaccurate profits, and illicitly awarding high bonuses.


As a consequence of this scandal, the company could not recuperate from the mounting debt and was placed under business rescue in October 2022. A combination of heavy loan interest rates and deficient maintenance in its manufacturing plants precipitated a decrease in sugar production in South Africa. A rejected restructuring plan by creditors compelled the company into business rescue.


Despite refunding approximately half of the R12 billion debt that originated from the 2019 scandal, the reeling firm had to suspend trading on the Johannesburg Stock Exchange (JSE) in July 2022.


With the takeover, Terris Consortium is now in control of Tongaat Hulett's sugarcane plantations, refineries, mills, and undeveloped lands across the four countries, inheriting in the process its enormous workforce. As noted by an inside source, resumption of the company's share trading is expected, once the business rescue practitioners finalize the Terris Sugar scheme and schedule a vote on it. Terris Sugar now commandingly holds over 80% of the creditor's votes, exceeding the required 75% vote threshold for successful bidding.


As indicated by City Press, Terris Sugar will still allocate the R3.6 billion needed for the company's assets.



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