The Grahamstown High Court has placed the collapsed Magwa Tea project under the supervision of an interim business rescue practitioner.
This was done at the behest of creditor Eastern Cape Development Corporation (ECDC).
According to court papers, it will cost taxpayers another R51-million to rehabilitate the tea estate outside Lusikisiki which once annually produced thousands of tons of Ceylon tea.
Grahamstown attorney Mark Nettelton, who moved the application for the ECDC, yesterday confirmed that Judge Mandela Makaula had placed Magwa Tea into business rescue proceedings.
The Companies Act allows for distressed companies to be placed under business rescue under certain circumstances to facilitate rehabilitation.
A practitioner is appointed to manage its affairs and it enjoys a temporary moratorium on any legal or liquidation proceedings against it.
The ECDC believes that putting the estate into business rescue will give it some breathing space to get its house in order to start again with what ECDC CEO Ndzondelelo Dlulane referred to as a “clean sheet”.
The government has, since the 1990s, pumped millions of rands into the poorly managed and ill-fated company, with very little to show for it.
In 2010 labour unrest again boiled over, infrastructure was trashed and top management violently ejected. The tea estate was again in deep trouble and by last year barely produced 100 tons of tea.
Dlulane said acceptable levels of governance had been rendered impossible and, despite significant state expenditure, urgent intervention was now required.
It had been resolved that the Eastern Cape Rural Development Agency would take over responsibility for both Magwa and Majola tea estates in the long run.
He said rural development and agrarian reform MEC Mlibo Qoboshiyane had agreed to make R17-million immediately available to pay salaries and settle the liabilities of both estates.
In the new financial year the project would require another R34-million for the business rescue process, operational costs and to pay creditors.
“To walk away from the problem and the challenge would amount to a dereliction of the constitutional and social obligation of the provincial government,” he said in court papers.
In the meantime, the business rescue practitioner would bring it back into operation.
Magwa Tea estate placed under business rescue
This was done at the behest of creditor Eastern Cape Development Corporation (ECDC).
According to court papers, it will cost taxpayers another R51-million to rehabilitate the tea estate outside Lusikisiki which once annually produced thousands of tons of Ceylon tea.
Grahamstown attorney Mark Nettelton, who moved the application for the ECDC, yesterday confirmed that Judge Mandela Makaula had placed Magwa Tea into business rescue proceedings.
The Companies Act allows for distressed companies to be placed under business rescue under certain circumstances to facilitate rehabilitation.
A practitioner is appointed to manage its affairs and it enjoys a temporary moratorium on any legal or liquidation proceedings against it.
The ECDC believes that putting the estate into business rescue will give it some breathing space to get its house in order to start again with what ECDC CEO Ndzondelelo Dlulane referred to as a “clean sheet”.
The government has, since the 1990s, pumped millions of rands into the poorly managed and ill-fated company, with very little to show for it.
In 2010 labour unrest again boiled over, infrastructure was trashed and top management violently ejected. The tea estate was again in deep trouble and by last year barely produced 100 tons of tea.
Dlulane said acceptable levels of governance had been rendered impossible and, despite significant state expenditure, urgent intervention was now required.
It had been resolved that the Eastern Cape Rural Development Agency would take over responsibility for both Magwa and Majola tea estates in the long run.
He said rural development and agrarian reform MEC Mlibo Qoboshiyane had agreed to make R17-million immediately available to pay salaries and settle the liabilities of both estates.
In the new financial year the project would require another R34-million for the business rescue process, operational costs and to pay creditors.
“To walk away from the problem and the challenge would amount to a dereliction of the constitutional and social obligation of the provincial government,” he said in court papers.
In the meantime, the business rescue practitioner would bring it back into operation.
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