Tongaat Hulett Faces Turbulent Takeover Amidst Multi-million Rand Extortion Allegations

Tongaat Hulett Limited (THL), a South African sugar behemoth, has been thrust into the spotlight as details of an alleged extortion attempt surface amidst its contentious takeover. Sources have claimed that a newly invested shareholder demanded a staggering R580 million for their vote in favor of a debt to equity swap proposal spearheaded by Vision Investments. The consortium, led by Robert Gumede, has categorically rejected this overture, equating it to extortion.

Last week's pivotal shareholder vote rejected the debt to equity swap – an outcome that rids Vision from inheriting THL's legacy debts and ushers in a new chapter for the company. Shareholders had the choice to exchange their debt for a minimal 2.7% of the JSE-listed shares or face walking away with nothing. The chosen path now entrusts THL's future in the hands of Vision, sans interference from legacy stakeholders.

Insiders have pointed fingers at one particular shareholder, insinuating that their actions have thwarted potential prosperity for not only the company but also its diverse network of stakeholders - including employees and sugarcane growers. Critics argue that the very individuals who presided over the accumulation of a R8.5 billion debt are now obstructing recovery efforts.

The dramatic series of events stems from the acquisition of a 15% stake in Rudlands, an occurrence that set the stage for the alleged extortion attempt. The shareholder's demand for the R580 million clashed with Vision's valuation of THL's shares, which were deemed to hold negative value under the sanctioned business recovery plan.

Amidst this turmoil, Mozambican firm RGS Holdings, currently marred by fraud allegations, has entered the fray with a proposal to inject R8.5 billion into THL. This move coincides with an attempt to collapse THL's business rescue strategy, an effort that further muddles the company's recovery outlook.

Vision Investments, which includes stakeholders like Guma Agri’s Robert Gumede, Rute Moyo of Remoggo, Amre Youness of Terris Sugar, and Nauman Khan of Almoiz, had hoped that the debt to equity swap would pave the way for a financially healthier THL, capable of emerging from business rescue and thriving. Despite the recent setback, the consortium is moving forward with their plans. Regulatory bodies, including the South African Competition Tribunal, have already greenlighted Vision's acquisition of THL.

Vision's proposed debt for asset swap of all THL assets linked to R8.6 billion of secured debt marks a definitive strategy to rejuvenate the beleaguered company. The new unlisted entity aims to be free from historical financial entanglements, creating a strong foundation for renewed success. Vision has assured stakeholders that staff retention and grower support remain central to their agenda. Additionally, unsecured creditors will receive a R75 million goodwill payment, and Vision plans on venturing into energy generation as part of THL's diversification.

A source clarified that both Vision and the Industrial Development Corporation (IDC) were committed to reinvigorating THL with necessary funds, countering narratives that dismissed the consortium's financial capabilities. Observers note that while certain shareholders are credited with uncovering past fraudulent activities within THL, their current opposition to recovery plans could be detrimental to the company's already precarious situation.

As the company transitions, Vision stands poised to execute the approved business rescue plan without the influence of the "antagonistic" shareholder contingent, focusing on strategic investment and expansion to secure THL's long-term vitality.