SAA deadline for state funding
Department confident of potential partner
SAA’s business rescue practitioners have called time in the ongoing rescue saga, warning that if government funding to restart the state-owned airline is not in hand by next week, they will be forced to go back to the drawing board.
This would again place SAA in danger of liquidation, a fate the government has tried hard to avoid.
Liquidation would also not be to the advantage of employees whose retrenchment pay will be capped at levels far lower than the packages they have been offered.
The government has promised “to mobilise funding” for the airline, which requires R10.1bn to settle outstanding obligations, pay retrenchment packages and restart operations. The Treasury has said no resources for SAA are available from the fiscus.
The department of public enterprises has been trying to attract an equity partner and arrange finance from other quarters. It is understood that domestic banks that previously lent to SAA have declined to do so this time around.
In a letter to creditors and affected people posted on their website, rescue practitioners Les Matuson and Siviwe Dongwana said they have been in engagement with the government over the shortterm funding, which is required for operational purposes. The rescue plan put this amount at R2.8bn.
“The issue that the practitioners have to deal with at this point in time concerns the existing funds available for operational expenditure, which are near depletion, and thus the availability of the requisite funding to the airline during the course of next week will determine whether the business rescue proceedings can continue,” the notice said.
Matuson and Dongwana said that the government has undertaken to make the funding available in the course of next week.
The notice said: “Should the practitioners not be satisfied that sufficient progress has been made for the timeous advancing of the funding, a meeting of creditors will be convened on September 18 to engage with affected persons on the issue and the proposed way forward, taking into account all the relevant factors.”
The department said yesterday that these efforts were still under way with the assistance of transaction adviser Rand Merchant Bank, and that a number of expressions of interest had been received from private funders, equity investors and strategic partners.
“A number of engagements have been undertaken with the potential partners, and the interest is encouraging that a suitable long-term investor will be found to enable the relaunch of the airline and its subsidiary businesses and divisions ...
“The department remains confident that a solution will be found in time to avoid liquidation of SAA, as per the July 26 cabinet statement,” it said.
In a separate development, the final liquidation of stateowned airline SA Express was postponed on Wednesday to the end of October.
Liquidator Aviwe Ndyamara said he requested an extension of the final order as it was unclear what the status of SA Expresses licences would be once the liquidation was granted. This would have a bearing on the sale of the company, he said.
Ndyamara said that three offers for the purchase of the business were on the table. Reuters