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The Public Enterprises Department, which is SAA’s sole shareholder, missed the Thursday September 17 deadline to provide at least R10.4 billion for the restructuring of the airline. (Photo by Gallo Images / Netwerk24 / Lulama Zenzile)
The government has failed to provide the national airline with funding of at least R10.4 billion to implement the airline’s business rescue plan. Without this funding, the troubled company will approach its final resting place.
SAA is again in danger of liquidation because urgent financing for the business rescue process of the state airline has not materialized.
The Public Enterprises Department, which is SAA’s sole shareholder, missed the Thursday September 17 deadline to provide at least R10.4 billion for the restructuring of the airline.
The deadline was set by the business rescue professionals at SAA, Siviwe Dongwana and Les Matuson, on September 10, when they warned that the airline was facing dire financial problems because government funding had been seriously delayed.
On Thursday, September 17, rescue practitioners informed SAA’s creditors that they had again failed to obtain government funding despite the approval of the airline’s commercial rescue plan two months ago.
“The business rescue professionals hereby inform affected individuals that the company has not received the anticipated funds in accordance with the government’s commitment to provide the funds for the restructuring of the company and the implementation of its business rescue plan.” . Matuson and Dongwana he said in a letter to SAA creditors and other affected parties.
This means that business rescue professionals will be forced to schedule a meeting with creditors on Friday, September 18 to review the business rescue plan and the future of SAA. A meeting with the creditors has been called for 11 a.m. M. “Engage with affected people on this issue and the proposed future of the company, taking into account all relevant factors.”
“Business rescue professionals will provide an update on the status of SAA’s financial condition and current prevailing circumstances,” he said. Matuson and Dongwana.
Without funding, the Companies Law would require rescuers to declare that SAA has no prospect of being rescued and place it in liquidation, implying the death of the airline. The Companies Law governs the procedures for the rescue of companies in SA and establishes the role of rescue professionals.
The National Treasury and the Department of Public Companies joined forces in July to “mobilize funds” for the restructured SAA, but also said the money for the airline could not come from the fiscus.
The department said in a statement Thursday that “efforts to locate funding sources” for SAA were continuing. It also continues to work to attract equity partners who would inject capital into SAA in exchange for a stake in the airline, with the help of a transaction advisor. Rand Merchant Bank.
“The Department of Public Companies believes that the key to solving the difficulties faced by the AEA is the completion and execution of the business rescue process; followed by the start of a restructured airline, the appointment of a new board and executive team; and securing a credible strategic capital partner who can bring the required technical, financial and operational expertise into the business, ”the department said.
In July, SAA creditors voted overwhelmingly in favor of the corporate bailout plan, which requires at least R26.7 billion in short, medium and long-term government funding to restart the airline’s operations in January 2021. No However, at least R10.4 billion of the required R26.7 billion is new money.
Since the rescue plan was approved by creditors, rescue professionals said the government had only provided the airline with R9.3 billion in funds to pay off its lenders. This is not new money because it is part of the 16.4 billion rand already allocated by Finance Minister Tito Mboweni in the February 2020 budget for SAA to repay its historic debt with commercial banks, which are the largest creditors of the airline and whose loans are guaranteed by the government.
Rescue practitioners said that the R10.4 billion in new funds that are immediately required from the government “have not yet been made available to the company.”
This money is needed to pay SAA creditors (whose debt is not guaranteed by the government), downsizing packages to 2,600 affected workers and to finance the restart of the airline’s commercial flight operations in January 2021. DM / BM
