Acsa talks to its creditors
• Airport operator cannot rule out a request for support
Airports Company SA, the majority state-owned entity that owns and operates the largest airports in the country, says it is engaging with lenders on relaxing terms as it attempts to navigate the fallout from the Covid-19 pandemic.
Airports Company SA (Acsa), the majority state-owned entity that owns and operates the largest airports in the country, says it is engaging with lenders on relaxing terms as it attempts to navigate the fallout from the Covid-19 pandemic.
The company has seen a major chunk of its revenue base cut off, mainly because of the flight ban imposed by the government as part of measures to curb the rapid spread of the Covid-19 virus. Only chartered flights either bringing back South Africans stranded in foreign countries or transporting foreign nationals to their home countries are allowed, and then only after obtaining a permit.
Also, since early April, the outlook for two of the company’s largest domestic clients, Comair and SAA, appears to have become more dire, with SAA teetering on liquidation and Comair entering business rescue proceedings on May 5.
It is not known how much SAA owes Acsa.
“The company has taken steps to improve liquidity in the short to medium term. These include a reduction of both operational and capital expenditure, implementing working capital management plans to preserve the company’s cash position, and engaging lenders on headroom against financial covenants,” Acsa CFO Siphamandla Mthethwa said in response to questions from Business Day
Mthethwa said the group would only be able to determine whether it will require government assistance once it has completed its strategic review and engagements with stakeholders, a process he expects to conclude by the middle of June.
Acsa is majority owned by the government (74.6%) with the Public Investment Corporation owning 20% and a group of diverse minority shareholders owning the rest.
The company said it was carrying about R6bn in debt at the end of March, most of which is held in the form of listed bonds that have no financial covenants. Acsa does not have any government-guaranteed debt.
“Acsa went into the lockdown with a fundamentally different liquidity position and debt maturity profile to that of the Land Bank. Its debt maturity profile is significantly longer and means that Acsa has to meet capital redemptions and interest repayments of about R800m, which accounts for about 13% of total debt outstanding in the current financial year,” said Michelle Green, a credit analyst at Futuregrowth.
Acsa was downgraded to junk on March 31, after the decision by Moody’s Investors Service to withdraw the country’s investment-grade credit rating. Moody’s simultaneously placed the company under review, meaning another decision on its credit rating may be imminent.
According to Acsa’s presentation to investors on April 6, its base case scenario envisaged a 17% decline in passenger volumes for the year ending March 2021. This would require the company to reduce capital expenditure by R800m and operating expenditure by R600m, bringing total savings for the year of some R1.4bn, to
WE THINK THEIR FINANCIAL POSITION GIVES THEM SUFFICIENT HEADROOM TO MEET OBLIGATIONS AS THEY FALL DUE
avoid seeking financial assistance from shareholders.
“Management have been open and proactive about their Covid-19 response, and … we think their financial position gives them sufficient headroom to meet obligations as they fall due in the short term.
“Acsa’s ability to weather the storm thereafter will be dependent on their ability to implement the cost-savings identified,” Green said.
Based on a recent presentation shared with investors, it had approximately R1.6bn in cash at the end of March and has access to a further R1.5bn in unused debt facilities.