Struggling sugar maker Tongaat Hulett parts ways with CEO Gavin Hudson

Tongaat Hulett has parted ways with CEO Gavin Hudson who resigned from his position after four years on the job.

This comes as the sugar maker’s release of a business rescue plan for embattled sugar has been pushed by a month until the end of February.

Per media reports, the firm’s business rescue practitioners said in a statement that the delay came amid efforts to secure post-commencement financing for the company, meeting with affected groups, as well as investigating the affairs of the company, “which are very complex”.

Based in KwaZulu-Natal, Tongaat had entered business rescue in October, and lenders had previously agreed to about a two-month extension to its rescue plan.

Since then, the firm had secured post-commencement financing from the Industrial Development Corporation (IDC), saying on Monday that this “key step” in the process would allow for focusing on achieving successful business rescue of Tongaat and its underlying businesses.

News24 reports that the firm said Hudson would be leaving the group with effect from 28 February 2023, but his core team of executives would remain.

Hudson, a former SABMiller executive, was appointed on 1 February 2019 to spearhead a turnaround of the group, a mandate which included a comprehensive review of its finances.

“This review, along with an initial investigation into allegations made through a whistleblowing line, prompted further examinations. This then led to the firm asking the JSE to suspend trade in its shares in June 2019, amid concerns that its previous financial results couldn’t be relied upon,” reports the publication.

“In what subsequently turned into SA’s second-biggest accounting scandal after Steinhoff, a PwC probe identified 10 executives, including former CEO Peter Staude, who were allegedly involved in profit inflation. Charges have been laid against some of the former executives, and proceedings are expected to resume in 2023, with a pre-trial conference scheduled for 17 February.

“Tongaat’s shares had crashed in the wake of the scandal, and the firm had been battling with a crippling debt pile in its SA operations, which was threatening the group’s survival.

“The firm successfully disposed of its starch business, but plans to sell off property in KwaZulu-Natal were derailed, in part as a result of civil unrest in 2021 that hit property values. Covid-19, as well as floods in KwaZulu-Natal, came as additional blows to the more than 130-year-old sugar group.”

According to the report, a plan to raise up to R5 billion in a rights issue also failed to come to fruition, amid controversies centred on underwriter Magister Investments, and Hudson had mooted this as a way to keep the group’s sugar operations intact.