SAA rescue hits legal headwind
● State to oppose bid by domestic rival Airlink to stop creditors meeting
Regional airline SA Airlink has given notice to SAA that it will apply to a court to interdict Thursday’s creditors meeting and ask that the company instead be placed in provisional liquidation.
SA Airlink is one of the largest trade creditors of SAA and is owed about R500m, of which it is likely to see little, according to the draft business plan published last week.
Creditors are due to vote on the plan on Thursday.
Joint business rescue practitioners Siviwe Dongwana and Les Matuson advised affected parties of the development at the weekend and said they would oppose the application.
The department of public enterprises, which is not named as a respondent, said it would approach the court to also oppose the application.
In a letter posted on their website, Dongwana and Matuson said that SA Airlink had informed them that it intended to urgently interdict Thursday’s creditors meeting and stop any vote on the business rescue plan from being undertaken.
The application is to be heard today.
SA Airlink will also seek additional relief in an ordinary hearing to have the business rescue set aside on the grounds that no business plan was produced within the required time, there is no prospect of the company being rescued, and that the directors of SAA could not have reasonably believed that a rescue was possible when they placed it into business rescue on December 5.
It will ask the court to instead place SAA in provisional liquidation.
If successful, the interdict will further delay SAA’s costly and lengthy business rescue process, which has been under way for six months.
The draft business plan for a restructured SAA depends on a R10.4bn payment by the National Treasury for start-up capital and settling liabilities.
The Treasury has already agreed to repay the R16.4bn owed to lenders, bringing the price tag to almost R27bn over the next three years.
The biggest creditors to SAA are domestic banks and other financial institutions which cumulatively are owed R16.4bn in debt repayments and interest.
These are secured creditors and are guaranteed to be repaid by the Treasury.
Unsecured creditors — which include Airlink, which is owed for tickets sold on its behalf by SAA; Comair, which is owed R700m as part settlement of a fine levied on SAA by the Competition Commission; and suppliers to SAA — will receive no more than 7.5c in the rand, to be paid over three years from revenue flows earned by a restructured SAA.
However, creditors are unlikely to fare any better from liquidation.
It was found in a valuation conducted by PWC on behalf of Dongwana and Matuson that creditors would receive 0c in the rand if the company was liquidated.
The department said in a statement yesterday that it was also aware that the National Union of Metalworkers of SA (Numsa) and the SAA Cabin Crew Association plan to interdict the creditors meeting.
“It is disturbing that a competitor of SAA, which is 100% privately owned, as well as two labour unions, which should be acting in the best interest of their members, are seeking to destroy SAA by forcing a liquidation through the courts.
“The question is why?
“Is this really in the interest of SAA workers or the fiscus?” the department statement said. —