Five directors quit Tongaat

• Exodus a week after the start of business rescue

All five Tongaat Hulett nonexecutive directors have resigned just a week after the debt-laden sugar manufacturer went into business rescue. “The directors believe that the role they can meaningfully play in relation to the company in its present circumstances is extremely limited,” they said.

All five Tongaat Hulett nonexecutive directors have resigned just a week after the debt-laden sugar manufacturer went into business rescue.

In a statement on Thursday, the KwaZulu-Natal-based group said Andile Sangqu, David Noko, Louisa Stephens, Robin Goetzsche and Graham Clark resigned with immediate effect as nonexecutive directors from the board and the various board committees on which they served.

“The directors believe that the role they can meaningfully play in relation to the company in its present circumstances is extremely limited, and accordingly they have elected to resign,” said the group. The remaining board members thanked them for their support and the invaluable guidance provided during the past three years.

The exodus comes as the business-rescue practitioners (BRPs) of Tongaat Hulett affirmed on Thursday that in line with the labour relations act, the rights of employees of the group would remain protected during the business rescue process. In 2021, Tongaat had more than 28,900 permanent and seasonal employees in its peak season, in SA, Mozambique, Zimbabwe and Botswana. Locally, nearly 15,000 permanent and seasonal farm workers are employed by sugar cane growers who supply cane to Tongaat’s plants.

In line with the Companies Act, the BRP met with Tongaat employees on Thursday for the first time since the company officially undertook business rescue proceedings exactly a week ago.

After the first meeting with employees, the rescue practitioners Trevor Murgatroyd, Petrus van den Steen and Gerhard Albertyn emphasised they had complied with the law in the form of the companies and the labour relations acts, saying that “employees’ rights remain protected during the businessrescue process”.

The BRPs announced they were gearing up to meet creditors on Tuesday, November 8.

“In the interim, the BRPs are focusing on stabilising operations while seeking the requisite post-commencement funding,” they said in a statement.

In February 2019, Tongaat was facing near collapse after an accounting scandal that resulted in the loss of significant value for its shareholders.

Since then, the group has embarked on a comprehensive turnaround strategy under a new management team led by CEO Gavin Hudson, with a focus on financial controls.

But the company’s stubbornly high debt has made the task difficult, while a small group of investors managed to stop a R4bn rights offer going ahead that would have seen Mauritiusbased Magister gaining control of the company at a bargain price.

The group’s inability to publish its provisional results on time resulted in the JSE suspending it from trading on the bourse in July.

That was only weeks after turnaround specialist Piers Marsden was appointed chief restructuring officer in June.

But lenders finally lost their patience last month, and demanded that Tongaat pay up.

Now the future of one of Southern Africa’s largest employers hangs on the success of the rescue plan that is aimed at breathing life back into the 130-year-old group.