Don’t panic over SAA bailout — Gigaba
The government is talking to lenders and exploring options for a capital structure to provide the R10-billion that is required to bail out SAA, Finance Minister Malusi Gigaba said on Friday.
Gigaba was speaking following the first working session of the CEO Initiative steering committee under his tenure, which he co-chaired with CEO Initiative chairman Jabu Mabuza. The meeting came as Citibank this week reportedly refused to extend its R1.8-billion loan to SAA after Standard Chartered did the same in June.
However, it is understood that there is no official demand from Citibank for the loan to be repaid immediately.
Gigaba said the Treasury had compiled proposals that were presented to the cabinet but had not yet been finalised.
He warned against “any hysteria created by our considering of various options”.
He said the cabinet had appointed four ministers: the ministers of public enterprises; telecommunications and postal services, and finance and economic development, to explore various options to capitalise SAA.
While not commenting directly on a sale of Telkom shares to fund the shortfall at SAA, Gigaba said SAA could be “harvesting” between R1.5-billion and R2-billion from renegotiating pilot contracts and uncollected ticket fares while also renegotiating other contracts and improving management and the capital structure.
This week the DA alleged the Treasury was planning to sell its 39% stake in Telkom, worth about R14-billion, to bail out SAA. This would apparently be done by introducing a special appropriation bill recommending the R10-billion appropriation.
Mabuza, who is also Telkom chairman, said they had cautioned the government to be mindful of any public pronouncements that could affect the shares.
Sipho Maseko, Telkom CEO, told Business Times he was not privy to discussions about a potential sale of the government’s stake.
“We just want certainty as quickly as possible,” he said.
Gigaba’s meeting with the CEO Initiative steering committee, which included JSE CEO Nicky Newton-King and Investec CEO Stephen Koseff, was also an opportunity to mend bridges with business.
The relationship soured after the surprise cabinet reshuffle in March led to downgrades of South Africa’s foreign currency rating, which was what the CEO Initiative and former finance minister Pravin Gordhan had worked on for over a year to avoid.
Tanya Cohen, CEO of Busa, who was also present at the meeting, said one of the major issues raised which was in the way of business confidence and was threatening further downgrades was the issue of Eskom and SAA and their need for bailouts, and governance and management of the institutions.
But she said after the meeting there was “a common commitment to try and work together and . . . reinstall some confidence”.
“We had discussion around addressing the ratings agencies concerns. What we are seeing out of this meeting is really a step in the right direction.
“What we did get from minister Gigaba is a very sincere and honest reflection of some of the challenges . . .”