SAA rescue opposed

TURNAROUND: SA AIRLINK, UNIONS CHALLENGE NEW STRATEGY

Court action to interdict creditors meeting to adopt the proposed plan.

Asham and a fraud on the creditors. This is how one such creditor – SA Airlink – has described the proposed turnaround plan for the South African Airways (SAA).

This in an urgent court bid to stay the adoption of the plan.

Business rescue practitioners (BRPs) Les Matuson and Siviwe Dongwana, who were appointed to try and salvage the state carrier, published their proposed plan for SAA on 16 June.

Now, SA Airlink has approached the High Court in Johannesburg in the hopes of interdicting the meeting scheduled for

Thursday to vote on it.

This pending the outcome of an application to set aside the decision to place SAA in business rescue and, instead, begin liquidation proceedings. The case is expected to be heard tomorrow.

In the court papers, Rodger Foster, the chief executive of SA Airlink, said the proposed plan brought “little clarity or certainty on how SAA will continue to exist as a going concern, following its business rescue”.

Foster pointed to various concerns with a draft proposed plan raised at a meeting earlier this month and said the published version did not address them.

“The proposed plan does not appear, in any material way, to deal with the submissions made by the creditors, despite the BRPs indicating that significant changes would be made,” he said.

He said that in some respects, the proposed plan left the creditors in a worse position than the draft had.

Under the draft proposed plan, he said, general concurrent creditors would be paid an amount of R600 million over a period of three years and would receive a form of “equity” if there was any money still outstanding at the end thereof.

“The position under the proposed plan is the same, save for the fact that there is no longer provision for the form of equity as set out in the draft proposed plan,” he said, Foster said liquidating SAA would allow for the airline’s assets to be sold “and for proper investigations to be held into the financial affairs of SAA”.

“This could potentially result in the recovery of assets or action(s) taken against directors, the shareholder and others who may have been responsible for the hopelessly insolvent state of SAA,” he said.

“Under business rescue, SAA’s debts owed to concurrent creditors will simply be ‘discharged’ in terms of the proposed plan.”

Of the impact on SAA employees, Foster said even under the proposed restructure. SAA “will continue to experience losses as it has in the past”.

Foster said liquidating SAA was “the only viable option”.

The department of public enterprises (DPE) yesterday confirmed it would be moving to oppose the application.

“The DPE will also oppose SA Airlink’s application that SAA be placed under provisional liquidation,” the department said in a statement.

In addition, it said it was “aware of plans by the National Union of Metalworkers of South Africa and the South African Airways Cabin Crew Association to interdict the creditor’s meeting through the courts” – and would oppose this, too.

Proposed plan leaves creditors in a worse position