Tea estate given reprieve

Court extends business rescue process for Magwa

The Grahamstown High Court has extended to July the business rescue process under way to resuscitate the beleaguered Magwa tea project near Lusikisiki.

In terms of the law, courts generally allow companies just three months in business rescue.

But this is the fifth extension granted to Magwa business rescue practitioner Garth Voigt who faces the highly complex task of turning around a project that has faced disastrous and repeated failure over more than two decades.

Numerous large financial bailouts by the province have failed to turn around the tea estate and processing plant, which has not produced significant amounts of tea since its heyday in the 1960s and ’70s.

Despite this, it is the single biggest employer in the area.

According to court papers, in 2010 it produced some 2 700 tons of tea and was once again approaching sustainability.

But workers at the estate went on the rampage when their demand for a 98% increase in wages was refused. Management was forced to flee and the estate and its infrastructure was largely destroyed.

Until it was placed under business rescue in February last year, it produced almost no tea and governance and accountability were non-existent.

The provincial government had now provided a guarantee of a bailout of some R110-million, which Voigt said in an affidavit had begun to trickle through.

The benefits were already being felt, with the tea estate this month producing its first harvest in years, albeit humble. He said there had been expressions of interest from private investors in investing in other crops including macadamia nuts and avocados.

Voigt said safety and security remained a problem but the police had expressed an interest in establishing a base at the tea project, with regular horse patrols.

He said with the extension in place until July next year he could cement private investor interest and formulate a business plan.

About 240 people were employed to establish the tea estate as a functioning entity and this was likely to escalate to 1 000 once the pruning process began.

Voigt’s correspondent attorney Mark Nettelton confirmed that Judge Gerald Bloem had extended the business rescue process to July.

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