RGS Group has applauded the outcome of the vote on Friday by Tongaat Hulett shareholders as a decisive victory for shareholder activism and corporate governance, benefiting all employees, creditors, stakeholders, and South Africans.
This comes as the majority of shareholders of Tongaat Hulett voted against the proposed debt-to-equity conversion that would have handed a 97.3% controlling share of the company to the Vision Group.
This decision arises amid questions over Vision Group’s failure to meet the financial requirements outlined in the adopted business rescue plan, a condition that was integral to the proposed deal.
RSG yesterday said with this vote complete, it was now time for the Vision Group to lay its true cards on the table and demonstrate its financial capability to implement the adopted business rescue plan as voted by the creditors of Tongaat Hulett.
Aquil Rajahussen, RSG chairman, said it was important to note that despite its public claims, Vision cannot simply take over Tongaat Hulett and delist it, and there was no lawful mechanism under the business rescue plan for Vision to acquire the company’s assets.
“Tongaat Hulett shareholders have sent a clear message that accountability, transparency, and adherence to the terms agreed upon in the adopted business rescue plan are non-negotiable,” Rajahussen said.
“As such, the rejection of the Vision Group’s attempt to secure a controlling stake in Tongaat Hulett without fulfilling its financial obligations signals a broader win for all stakeholders involved, safeguarding the future of the company and the entire local sugar industry.
“We recognise that the road ahead may be challenging. However, the decision today lays a strong foundation for the future, which will be rooted in strong corporate governance. Shareholders are to be applauded for their vigilance in ensuring that the Vision Group and the business rescue practitioners (BRPs) are held accountable for meeting their obligations,” he said.
The South African sugar industry is valued at over R18 billion per annum and supports more than 1 million people, including over 20 000 small-scale sugarcane farmers in KwaZulu-Natal.
To improve the balance sheet of Tongaat Hulett, Vision proposed a debt to equity swap, whereby R5bn of the R8.6bn debt currently owing would be swapped for fresh equity being issued by Tongaat Hulett to Vision, while the residual R3.6bn of debt still owing to Vision would be held as subordinated long-term debt in Tongaat Hulett.
However, RGS Group is of the view that allowing the Vision Group to take control of Tongaat Hulett without making the necessary capital injection, while allowing the Lender Group to retain R3.6bn of the company’s debt would not constitute a true recapitalisation of the business.
RGS Group spokesperson Keeghan Sipahli said such a move would neither stabilise the company’s financial footing nor position it for future growth.
Sipahli said the vote against the debt-to-equity conversion further pointed to serious concerns surrounding the implementability of the adopted business rescue plan.
“There are growing questions about whether the Vision Group is genuinely capable of meeting its financial commitments and how much more time should be afforded before the plan is declared unimplementable, and an alternative plan is considered,” he said.
In light of the shareholders’ vote, RGS Group submitted an alternative business rescue proposal to the BRPs.
“We reject their baseless claims, and reaffirm our commitment to upholding the highest standards of integrity and compliance with all legal requirements. As Tongaat Hulett moves forward in the business rescue process, RGS will maintain a rigorous and principled approach, ensuring that all stakeholders and creditors are treated fairly, respectfully, and professionally,” Sipahli said.
“RGS Group Holdings remains committed to finding a sustainable and beneficial solution for all stakeholders involved in the Tongaat Hulett business rescue process. We look forward to further engagements with the BRPs and other interested parties to ensure the best possible outcome for Tongaat Hulett, and the broader sugar industry,” he said.
The Vision Investments consortium spokesperson, Rob Bessinger, had not responded to Business Report by yesterday afternoon.
