Hope high for Mango sale

MINISTER WHO PUT UP ‘STRANGE, OUTRAGEOUS’ RESISTANCE GOING

No logic to stopping transaction – business rescue practitioner.

Sipho Sono, the business rescue practitioner in charge of executing low-cost state airline Mango’s business rescue plan, is hopeful that with Public Enterprises Minister Pravin Gordhan’s departure from politics, which was announced last week, his strange resistance to the sale of Mango will also vanish.

Mango is a subsidiary of South African Airways (SAA), which is involved in a controversial sale agreement with the Takatso Consortium for 51% of its shares.

Sono said there was no logic to Gordhan’s fight against the sale, since both SAA and Takatso have indicated that they are not interested in operating a low-cost airline.

“A new minister may have a different view and look at things objectively,” he said.

Gordhan has for an extended period of time failed to take a decision on the sale, which has had a paralysing effect on the business rescue process and efforts to revive jobs, since his approval as shareholder representative is a legal requirement for the sale to proceed.

Sono said Gordhan has not given any substantive reason for his opposition to the sale.

If Gordhan had rejected the request, his decision could have been taken on review, but by simply refraining from taking any decision, he deprived the business rescue practitioner of that legal strategy.

In the end, Sono did go to court and in September last year the High Court in Johannesburg ruled that Gordhan’s failure to take a decision was unlawful and unless he took a decision within 30 days, Sono was entitled to proceed with the transaction.

That was, however, not the end of the matter.

After being denied leave to appeal, Gordhan filed a late petition to the Supreme Court of Appeal (SCA) to be heard on the matter and on 14 February lodged an urgent application in the high court to stop Sono from proceeding with the sale until the proceedings in the SCA have been finalised.

The parties have now agreed that the urgent application to stop the sale will be heard in the week of 2 April and if the SCA has ruled whether it will condone Gordhan’s late filing of the petition, that decision will also be put before the high court.

In the meantime, Sono gave an undertaking not to sign a final agreement with the identified buyer, Ubuntu Air Services, for the sale of Mango before 5 April.

According to reports, Ubuntu Air Services is a partnership between South African tour operator AfricaStay, a specialist in Indian Ocean holidays, and DG Capital.

Mango has not been flying since it entered business rescue in mid-2020-21. The airline nevertheless has considerable value, said Sono. This lies in:

The Mango brand; A customer base that is likely to return when it flies again;

Large number of passengers who will return to redeem vouchers for flights they booked when it was flying and may lay the ground for the future customer base;

Its domestic licence, which will enable a newcomer in the domestic airline market to expedite its market entrance; and

Mango’s proven IT and other systems.

The sale is central to the business rescue plan adopted by creditors in December 2021. If it fails, the alternative will be to wind down the business.

Sono did not believe the undertaking to refrain from signing the agreement with Ubuntu before 5 April will hamper the transaction further. He said the agreement is 90% drafted, SAA has reviewed it and all that is left is some “fine-tuning”. He hoped to have the deal in the bag by early April.

Numsa spokesperson Phakamile Hlubi-Majola told Moneyweb Gordhan’s resistance to the sale is “outrageous”.

“The purpose is that Mango will no longer be a burden on the state. The minister is sabotaging the process.”