Tongaat CEO steps down as creditors approve extension of rescue plan
Gavin Hudson to leave embattled sugar producer at the end of February after nearly four years at the helm
Tongaat Hulett CEO Gavin Hudson has resigned from the beleaguered sugar group, while a second postponement of the publication of its business rescue plan by a month was also approved by creditors, the group’s business rescue practitioners (BRPs) said.
Hudson had tendered his resignation with effect from February 28, Tongaat said in a statement on Monday, adding that his core team of executives would continue to work with the BRPs.
The future of SA’s biggest sugar producer and land developer is in the hands of the practitioners, with the livelihoods of thousands of workers delivering cane to some of its mills in KwaZulu-Natal on the line.
“Hudson spearheaded efforts to recover the group four years ago after the discovery of accounting irregularities in 2019,” the BRPs and board said in a statement, lauding Hudson for his contribution in reducing the group’s debt burden by R6.5bn and turning around governance and operational processes.
“Unfortunately, these turnaround efforts were hampered by Covid-19, civil unrest and floods in KwaZulu-Natal and the company commenced business rescue proceedings in October 2022,” Tongaat said, but did not mention who would take over the helm.
Tongaat, which was placed in business rescue in October after its lenders failed to give their backing to a restructuring plan, had initially planned to publish the plan within 25 days of commencing rescue operations as per the Companies Act. However, in mid-November the delivery date was postponed to January 31 with the approval of most of the creditors.
Now on the eve of the due date, the group has once again opted for a postponement until February 8, saying the extension was requested to allow further time to progress the complex work streams.
The BRPs confirmed in December that the Industrial Development Corporation of SA (IDC) had advanced post-commencement finance to fund the working capital requirements and off-crop maintenance.
The BRPs said the IDC finance will allow the team to focus on the next phase of business rescue proceedings.
But the grower-led consortium NewCo, which is seeking to acquire the critical assets of Tongaat Hulett, believes it is only a short-term fix that “leaves too much uncertainty to allay growers’ concerns” about the survival of the mills and their businesses.
All five Tongaat non-executive directors resigned just a week after the debt-laden sugar manufacturer went into business rescue.
The shares of the 130-year-old company remain suspended on the JSE.