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While more time consuming to complete, there is no reason why an asset transaction cannot result in a re-capitalisation of [Vision Investments], such that the new THL is faced with a debt level that is a manageable quantum and repositions the new THL to operate successfully post business rescue. - THL Business Rescue Practitioners

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Sizwe sama Yende

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The business rescue practitioners (BRPs) of sugar giant, Tongaat Hullet Limited (THL), are optimistic that Vision Investments can save the company despite shareholders having rejected a debt-to-equity swap deal.

The BRPs said in their update report released on Friday that there was a reasonable prospect of a successful business rescue even though Vision Investments must change tack and go for an asset transaction, which will take longer than a debt-to-equity swap.

Vision’s debt-to-equity proposal would see the company owning 97.3% of THL and the remaining stake being left in the hands of the shareholders, but the shareholders preferred to vote against it on August 8. 

This happened while Vision’s competitor, RGS Holdings from Mozambique, was trying to foist a new offer of R8.5 billion to the BRPs even though they had previously drawn heat on themselves when they submitted a fraudulent letter from ABSA serving as proof of funding of R2billion. Vision has since laid a charge.

RELATED: Robert Gumede’s consortium declined to buy a vote for R600m

Vision’s proposal would see R5billion of the Lender Group being exchanged for Vision’s stake, and 2.7 % stake of R3.6 billion being taken by the shareholders.

“In our view the equity transaction would have been the most efficient way in which to implement the approved business rescue plan, resulting in a speedy termination of business rescue and the return to normal operations,’’ the BRPs said in their update.

Vision will now go for the asset transaction, which will see THL selling all its assets, including its businesses as going concerns, to Vision by way of a set off of the purchase consideration for such assets against the Lender Group claims.

This transaction will result in shares held by existing shareholders having nil value. The asset transaction will practically necessitate the delisting of THL from the JSE and the shell being liquidated. However, this transaction will not affect employees, unsecured creditors and secured creditors. Vision commits to pay R75 million to unsecured creditors as a gesture of goodwill.

“While more time consuming to complete, there is no reason why an asset transaction cannot result in a re-capitalisation of [Vision Investments], such that the new THL is faced with a debt level that is a manageable quantum and repositions the new THL to operate successfully post business rescue,” said the BRPs. 

RELATED: Vision Investments unperturbed by shareholders vote, going ahead with plan to rescue THL

The asset transaction may take longer to complete given the need to obtain additional consents and approvals for the transfer of contracts, licenses and permits.

“The implementation of the asset transaction should achieve the same result (as debt-to-equity swap) in establishing a stable operating basis going forward,” the BRPs said.

The total claims against THL, including but not limited to those of the Lender Group, amounted to R13 billion as at October 31 2023. In October 2022, the book value of all THL assets was R5.9 billion and liquidation value of THL assets would be R5.1 billion. 

“As previously noted, Vision has acquired the claims of the Lender Group (a loan portfolio with a book value of approximately R8.6 billion) and paid a substantial deposit. It is apparent that after the realisation of assets there will be debt remaining of approximately R7bn. As a result, in the event of a sale of assets, there would be no surplus available to shareholders,” said the BRPs.

“Various media reports and certain shareholder comments suggest that a break-up of the group (i.e.sale of each asset on a piecemeal basis) would result in value remaining for shareholders. For this to happen, the assets of THL would need to realise well in excess of the remaining claims of R13 billion, before the escalation of the claims due to the accrual of interest.”

The BRPs have dashed any hope that they would consider and entertain any other offer. They said that the shareholders had not presented them with any alternative workable plan after their vote, and added that their objectives were unclear.

“Regardless of whether the shareholders had done so, the BRPs are bound by statute to pursue the implementation of the Approved Business Rescue Plan, and are not in a position to consider an alternative plan in any case,” they said.

Vision Group said that it was unfortunate the shareholders voted themselves out of the business rescue process.

“We note the gymnastics of the disgraced self-confessed fraudsters, RGS, flying a kite with their new phantom offer of $8.5 billion not backed by one penny but by monopoly paper money “.

The company said that it rejected attempts of “extortion” of R600m by one shareholder for his vote. “We agree with the BRPs that unfortunately the THL shareholders voted themselves out of the BR process and have closed the curtain of THL listing on the JSE.”

Vision has indicated that it intended diversifying THL and expansion into energy generation (Ethanol & Electricity from bagasse) to alleviate energy supply challenges and costs.