The sugar producer Tongaat Hulett, currently in business rescue, now has no other choice but to pay the approximately R1.5 billion he owes to the South African Sugar Association (Sasa).
This follows after the company’s appeal application was rejected by the High Court in Durban on Monday.
RNews previously reported that Tongaat Hulett and Gledhow mill failed to pay the dues to Sasa. As a result, the final price for recoverable value in the 2022-23 season has fallen by more than R400 per tonne.
According to the South African Sugarcane Growers’ Association (SA Canegrowers), this drop had significant financial consequences for farmers and put the sustainability of their operations in the balance.
The association welcomed Monday’s decision.
Tongaat Hulett made headlines after failing to pay farmers who supplied sugarcane to his mills in Felixton, Amatikulu and Maidstone. The company announced in October 2022 that it had started a voluntary business rescue process.
However, Judge Rashid Vahed found the levies in terms of the Sugar Industry Agreement (SIA) to be legally binding. It therefore follows that any outstanding levies are still payable according to this, despite the fact that Tongaat Hulett is in a process of business rescue.
“The aim of the SIA is to ensure that sugar farmers, millers and refiners receive a fair share of the proceeds from local sugar production. The court order compels Tongaat Hulett to fulfill his financial obligation accordingly,” says Sasa in a statement.
“Although Tongaat’s case rescue practitioners can still approach the Court of Appeal, Sasa remains hopeful that Judge Vahed’s ruling has provided the necessary clarity so that the case can be closed.
“Tongaat’s overdue payments put unnecessary pressure on sugar farmers and put their livelihoods at risk.”
