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The embattled aviation group Comair confirmed on Friday that the “vast majority” of its creditors and shareholders have voted to adopt its corporate rescue plan.
This will see the group receive a new cash injection of R500 million and go back on the air in December, however, it means that Comair will effectively go private and be delisted by JSE.
Comair, which owns low-cost airline kulula.com and operates British Airways local flights in South Africa, applied for the corporate bailout on May 5 after being punished due to Covid-19 blocking regulations. At that time, it also suspended trading on the JSE.
The devastating financial impact of the initial “hard lockdown” and its business rescue process meant that it was unable to fly with the main competitors, Flysafair and Mango, when local flights were allowed from June.
“In terms of the business rescue plan, the preferred investment consortium, which includes several former Comair board members and executives, will invest new shares of R500 million in exchange for a 99% stake once they have been fulfilled the conditions precedent established in the business rescue plan. met. Up to 15% of this will be allocated to a broad-based BEE partner within 12 months, ”the aviation group said in a statement Friday afternoon.
Read: Comair is not insolvent and can be bailed out – BRPs
“Over the next two months, R100 million will be paid in two equal installments as guaranteed post-start financing. Additional financing is required from lenders of R1.4 billion and will comprise R600 million in new debt. The remaining 800 million rand will be deferred debt, with deferred principal payments for one year and interest for six months, ”he added.
Comair confirmed that it will be removed from the JSE and a new board will be formed.
“The restructuring plan will focus on reducing operating costs and increasing revenue from ancillary services. This will reduce the current workforce from approximately 2,200 employees to 1,800, ”the aviation group noted.
The roughly 400 job cuts are due to voluntary downsizing and early retirement programs, as well as the Section 189 downsizing process that began before the corporate bailout continued.
“The fleet is intended to be restored to 25 aircraft, including two Boeing Max aircraft. The aircraft will gradually return to service from December with an acceleration period of seven months until June 2021, ”said Comair.
The group added that existing relationships will be maintained with British Airways, Discovery Vitality, Slow Lounges and Boeing.
Comair CEO Wrenelle Stander welcomed the adoption of the business rescue plan that should save 1,800 jobs.
Wrenelle Stander, CEO of Comair. Image: supplied
“When the shutdown occurred, the corporate rescue became the only responsible course of action. If we had not made that difficult decision, Comair would not have flown again. There may still be some obstacles in the way, however now that the plan has been adopted, clearer skies are finally looming, ”he said.
Listen: Comair Reports Loss of R564m Headlines
Richard Ferguson, one of the business rescue professionals, said a number of suspension conditions in the plan still need to be met. If this does not happen, the company will be liquidated in a structured way to achieve the best return for creditors.
“That does not diminish the important moment [the adoption of the business rescue plan] this is for Comair, its employees, investors and the South African air public. After almost six months of intense work and negotiation in a tense economic environment, it is an exceptionally positive result, ”he said.
Glenn Orsmond, representative of the Comair Rescue Consortium, confirmed that Comair plans to restart air services in December with the British Airways and Kulula brands.
“We are grateful for the support of creditors and shareholders and we are honored by the overwhelming support of the Comair staff. We are excited about the prospect of rescuing Comair and restoring it to its former position as the preeminent airline in South Africa. “
Comair’s business rescue process should be fully concluded by March 31, 2021, if all goes according to plan.
