Tongaat Hulett Liquidation in South Africa Leaves Zimbabwe Sugar Operations Intact, Control Battle in Focus

HARARE – The anticipated liquidation of Tongaat Hulett in South Africa is not expected to disrupt sugar operations in Zimbabwe, according to Hippo Valley Estates, although the unfolding developments are drawing close scrutiny from investors and industry observers.

Tongaat Hulett wholly owns Triangle Ltd and holds a controlling 50.3% stake in Hippo Valley Estates. Collectively, the two companies account for more than half of Zimbabwe’s sugar output, positioning Tongaat’s corporate restructuring as a matter of strategic importance for the sector.

Tongaat Hulett entered business rescue in October 2022 following financial distress linked to a corporate scandal that left the group with liabilities estimated at R12 billion. On Thursday, Business Rescue Practitioners confirmed plans to file for liquidation, citing the exhaustion of viable recovery options.

Hippo Valley Estates moved swiftly to reassure stakeholders, emphasising the operational independence of the Zimbabwean entities.

“The developments in South Africa do not involve our Zimbabwe operations, which function as independent legal entities with separate management, finances, and operations,” the company said in a statement. “Triangle Ltd and Hippo Valley Estates remain financially robust, operationally sound, and fully committed to all contractual obligations.”

Attention is now shifting to the ownership contest surrounding Tongaat’s assets. In 2024, a rescue plan proposed the sale of Tongaat’s holdings to the Vision Group, a consortium that includes South African businessman Robert Gumede and Zimbabwean investor Rutenhuro Moyo.

Under the plan, Tongaat would transfer 100% of its shares and shareholder loan claims to Vision Sugar Holdings, effectively handing the consortium control of Triangle Ltd and its indirect majority stake in Hippo Valley Estates.

The restructuring strategy initially centred on a debt-to-equity conversion, with an asset sale as a fallback. After acquiring Tongaat’s bank debt, the Vision Group emerged as the principal secured lender. However, the consortium’s failure to refinance funding from the Industrial Development Corporation ultimately stalled the rescue process, contributing to the decision to pursue liquidation.

With secured claims estimated at R8 billion, the Vision Group is expected to wield considerable influence over the disposition of Tongaat’s assets, intensifying interest in the eventual control outcome.

Tongaat’s assets have long attracted suitors. In 2022, shareholders rejected a rescue proposal from Zimbabwean businessman Hamish Rudland, whose company Magister Investments had offered to underwrite a R4 billion rights issue.

More recently, Zimbabwean authorities opposed a proposed acquisition of the estates by Tanzania’s Karega, instead expressing preference for acquisition through the Mutapa Investment Fund. Treasury Secretary George Guvamatanga at the time underscored the government’s strategic interest, describing its relationship with the sugar estates as extending beyond commercial considerations.

Regulatory and policy factors further complicate the landscape. In 2021, Tongaat’s Zimbabwe sugar milling licence was extended to December 2040, while negotiations continue over 99-year land leases. The company is also involved in Project Kilimanjaro, a programme aimed at expanding sugar production through smallholder participation.

While immediate operational risks appear contained, market participants remain alert to how liquidation proceedings in South Africa could reshape ownership structures within Zimbabwe’s critical sugar industry.