Tongaat Hulett: Farmer-led group forms as liquidation looms

With the crucial liquidation hearing of Tongaat Hulett less than a month away and no firm solution in sight to prevent the company’s collapse, a newly formed grower-led entity has emerged to spearhead a rescue mission. Named “GrowerCo”, the initiative aims to secure the necessary funding to keep Tongaat Hulett’s mills and refinery operational.

Unlike an extractive private-equity model, GrowerCo’s proposal is built around the long-term sustainability of Tongaat Hulett. The model includes both small- and large-scale sugarcane growers as direct equity partners, focusing heavily on maintaining milling operations, safeguarding jobs, and preserving economic activity across rural KwaZulu-Natal (KZN).

The 130-year-old sugar giant serves as an economic anchor for entire rural communities, supporting between 35 000 and 40 000 direct jobs at farm level, within its mills, and at its central refinery.

“The future of KwaZulu-Natal is intricately tied to the future of Tongaat Hulett. The long-term economic and societal consequences of its liquidation would far exceed the liabilities on the company’s balance sheet,” said Pratish Sharma, a grower who supplies Tongaat Hulett’s Maidstone mill.

A sustainable alternative to private equity

More than 17 500 of South Africa’s 28 000 sugarcane growers supply Tongaat Hulett, with the vast majority being small-scale farmers. Furthermore, about 77% of the South African sugar industry’s revenue stems from KZN, where Tongaat Hulett remains a dominant driver of economic activity.

Beyond immediate economic stabilisation, GrowerCo is being positioned as a vehicle for profound social change.

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“GrowerCo not only makes sense because it puts Tongaat Hulett under the ownership of people with a long-term commitment to the sugar industry in South Africa, it is also a beacon of what true economic transformation can be,” said Nicholas Ngobe, a grower supplying the Amatikulu mill.

“Small-scale growers are equity partners in GrowerCo and will earn returns not only on their sugarcane but will share in equity growth over the long run. This creates the possibility that a sugarcane grower who today owns and farms their own land, but whose forebears may once have worked as indentured labourers in the province’s sugar fields, could become an owner in one of South Africa’s oldest sugar companies.”

The financial case for creditors

GrowerCo argues that, with the support of patient, long-term capital, the proposal offers a viable opportunity to stabilise and strengthen one of the country’s most critical agricultural value chains.

According to GrowerCo’s financial projections, a formal liquidation would destroy both rural livelihoods and the asset value for Tongaat Hulett’s current debtors.

GrowerCo estimates that debtors would be able to realise R3 billion to R4.5 billion for Tongaat Hulett if it is sold as a going concern, whereas value recovery during liquidation would be as low as R1 billion to R1.5 billion.

“Under this model, every creditor recovers more,” Sharma added. “GrowerCo is a stakeholder-inclusive plan to avoid a liquidation scenario and to ensure that Tongaat Hulett’s South African sugar operations can continue as a going concern.

“It has been designed by the people who supply the cane, operate the mills, and depend on the industry, and is built around patient capital and a model of reinvestment. GrowerCo would also be a beacon of real transformation in South Africa by including small-scale growers at ownership level.”

Securing the value chain

Tongaat Hulett’s South African sugar assets sit at the centre of an integrated rural economy that interconnects cane growers, mill workers, transporters, food producers, retailers, and consumers.

The investment case for GrowerCo rests on this deep operational interdependence: without functioning mills, growers have no route to market, and without a sustainable supply of cane, the mills themselves hold no value. By establishing a grower-led ownership structure, the entity aims to secure both sides of the equation, fostering long-term operational stability for the entire agricultural sector.

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