SUGARCANE miller, Hippo Valley Estates Limited (HVEL) has revealed that its South African parent company, Tongaat Hulett Limited (THL), is in talks with eight potential investors as part of updating its business rescue plans (BRP).
In February, THL’s chief executive officer, Gavin Hudson, resigned after struggling to reduce the company’s debt burden by R6,5 billion (US$353,58 million) and turn around its governance and operational processes since the discovery of accounting irregularities in 2019.
Hudson’s struggles were owing to the impact of the COVID-19 pandemic, civil unrest and floods in KwaZulu-Natal, South Africa, which forced the group to commence a BRP in October 2022 to attract fresh capital. The BRP was entered into by THL and sister firm Tongaat Hulett Development Proprietary Limited.
In a statement, HVEL chief executive officer Aiden Mhere said some of the implications of updating the BRP included THL continuing with the operational aspects of the business and that creditors would only vote on the plan during September 2023.
“Engagement with the eight potential Strategic Equity Partners interested in the acquisition of, or investment in, the whole of THL and/or the SA Sugar businesses and/or parts thereof will continue,” Mhere said.
“The same workstreams as set out in the originally published business rescue plan, take place. Only the timing of events changes, with the sourcing of a strategic equity partner pre-dating the release of the revised business rescue plan.”
Updating that plan also means that THL’s operational and corporate restructuring will commence after the plan is signed off and there is clarity on the outcome of engaging strategic equity partners.
Under South African law, the goal of a business rescue is to prevent a firm from being liquidated and restore it to profitability, or at the very least improve the return to creditors.
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“On Friday 9 June, 2023 a notice was issued to affected persons to advise that the BRP is seeking to extend the voting on the business rescue plan from the last stated date of June 15, 2023 to no later than September 30, 2023. As they have communicated before, the BRPs wanted to publish a rescue plan that contained details relating to the outcomes of specific transactions,” Mhere said.
“Since the release of the business rescue plan, the BRPs and the management team in South Africa have continued with discussions with a range of parties.
“The BRPs reached an agreement with relevant stakeholders on Friday 9 June 2023 that updating the business rescue plan with additional details in terms of the strategic equity partner process (with firm offers expected during June/July) and other matters would be in the best interest of creditors before they are requested to vote.”
He said THL’s holdings in Hippo Valley Estates Ltd and Triangle Ltd, were not under business rescue and, therefore, were not directly impacted by the BRP.
“This does not impact its operations and the plan to rescue the business continues,” Mhere added.
THL owns 100% of the local agriculture-based sugar company, Triangle, through which it has a 50,3% stake in HVEL.
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