In a desperate attempt to save the jobs of nearly 15 000 workers, SA Canegrowers will today meet with business rescue practitioners after Tongaat Hulett Limited (THL) missed the deadline to pay R400 million for sugarcane deliveries made in September.
An additional R345 million is due by the end of November.
The embattled sugar producer also holds the future of at least 4 300 farmers in its hands. This, as anxious shareholders await news on the next steps for the company who shocked with its announcement this week that business rescue was potentially a better option than forced liquidation.
SA Canegrowers chairperson Andrew Russell says today’s meeting follows an emergency meeting on Monday between the business rescue practitioners and representatives of the growers impacted.
The missed payment, says Russell, puts at risk the livelihoods of thousands of growers and workers delivering cane to the Felixton, Amatikulu, and Maidstone Mill in KwaZulu-Natal.
“This includes … growers who delivered almost 600 000 tonnes of sugarcane to THL mills in September and were due to be paid more than R400 million by the end of October. More than 4 000 of these are small-scale growers who are especially vulnerable.”
Russell believes it is also important to stress that the sugar industry’s viability depends on the survival of both large and small-scale growers. Larger producers provide the bulk of the cane tonnage that is required to keep the mills running at 350 tonnes an hour and also cross subsidise small-scale growers through a variety of financial support mechanisms.
“The non-payment also places the livelihoods of an estimated 14 642 permanent and seasonal farm workers employed by these growers at risk. Notably, this figure excludes contractors, haulier companies, input suppliers, mill workers and other service providers throughout the value chain who will also be impacted.”
The number of jobs at risk is likely to increase as uncertainty rises about whether growers who delivered cane in October will be paid on time. An estimated R345 million will become due for payment at the end of November to cover these sugarcane deliveries.
The impact of the current situation is far-reaching and will be devastating, adds Russell.
He identified the affected communities as Empangeni, Eshowe, Gingindlovu, Amatikulu, Darnall, KwaDukuza, Shakaskraal, Tongaat, Ndwedwe, Isinembe, Nyoni, Entumeni, Kwambonambi, Nseleni, Melmoth, and Heatonville, Jozini and the Makhathini Flats.
However, Russell believes all hope is not lost. “While the current situation is dire, the sugar industry can still recover. But for this to happen, it is essential that THL secure the funding necessary to maintain its operations.”
Moneyweb reports that Tongaat’s South African operations are drowning in a pool of debt, which is estimated to total more than R5 billion, with a new R600 million short-term borrowing facility obtained on 29 July 2022 to assist towards an approximately R1.5 billion working capital shortfall now due for repayment.