Gordhan’s SAA truce on the rocks as business rescuers want to wind down
The truce between SAA’s business rescue practitioners and public enterprises minister Pravin Gordhan is on the rocks following their statement to a parliamentary committee on Friday that they intend to submit a report for the wind-down of the company.
Last week Gordhan secured a memorandum of understanding signed by Les Matuson and Siviwe Dongwana in which they agreed to hear out Gordhan’s plans for a new airline and to hold over any sale of company assets until June 30.
But on Friday, Dongwana told the standing committee on public accounts (Scopa) that he intended to finalise the plan for a structured wind down.
It became clear during the proceedings that Dongwana and Matuson, who are from different companies and each have their own team, did not speak with one voice. While Dongwana took the lead and answered all questions from MPs, Matuson read a prepared statement in which he praised the vision and tenacity of Gordhan. He made no other comments.
SAA has been in business rescue since December 5 and although the Companies Act states that a business rescue plan should be finalised within 30 days, the business rescue team has been granted several extensions by creditors.
NO FUNDING
But in April, after being told by Gordhan that there would be no further funding to recapitalise a restructured SAA, Matuson and Dongwana said they had no option but to liquidate or wind down the company. A wind down entails the disposal of assets — as businesses where possible — and the payment of liabilities with the proceeds.
Gordhan, who says that a state airline is a matter of national interest, wants to ring-fence the liabilities of the old SAA and start a new airline.
The memorandum of understanding was intended to secure the co-operation of Dongwana and Matuson in this project.
In the Scopa meeting, Gordhan laid bare his contempt for the business rescue team, saying that they had achieved nothing in five months while burning through R5.5bn in precommencement financing and invoicing the department for hefty fees.
ANC MPs backed him, criticising the lack of expertise in the team and the fees charged.
Gordhan was furious at Dongwana for disregarding last week’s memorandum.
“I am quite astounded that after all the interactions we have had today, Dongwana still says to you as a committee, says to the SA public – despite what the Companies Act says – that the business rescue plan will be done for a wind down.
“I think that is shocking. Instead of saying they will do a plan that gives options and allows stakeholders to comment, but there is a determination to present a business rescue plan without presenting [other] options to us,” he said.
Gordhan said that it was the business rescue practitioners’ responsibility to emerge with a credible plan and the outcome must be a viable business that is fair to creditors, fair to employees, fair to the public.
Liquidation was not an option, he said, as he did not know if “anybody cut a deal with someone in a nefarious fashion to get the assets on the cheap”, implying that the business rescue practitioners were angling for liquidation for nefarious purposes.
During the proceedings it was apparent that Dongwana told the committee that it was impossible to present a business rescue plan without a budget to back it and the delays in drawing up a draft plan were caused by uncertainties and delays around what funding the government could provide.
A draft plan given to Gordhan in March, just prior to the Covid19 crisis grounded air travel globally, estimated a cost of R7.7bn for a restructured SAA.
Gordhan responded by saying that no government funding would be forthcoming. The confirmation that no funding was available left Dongwana and Matuson to conclude that the only remaining options under the act were a liquidation or a wind down.
On Friday Gordhan said it was “petulant” of Dongwana and Matuson to argue about funding when their task was to draw up a plan for a viable business.
Asked by the DA’s Alf Lees whether the government would fund a new airline, Gordhan was noncommittal saying, “let’s see what is required and how we can mobilise for those funds”.