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By Siphelele Dludla 
10h ago
JOHANNESBURG – The government is willing to dip into its own pocket to rescue SAA and save the distressed airline from liquidation while asking various lenders to fund the R2 billion reduction process.
The Department of Public Enterprises (DPE) confirmed on Friday that it would introduce an Adjustment Appropriation Bill in Parliament to re-prioritize at least R10bn of its R312.8bn budget to help implement SAA’s business rescue plan.
“An announcement to this effect will be announced in the Adjustment Appropriation Bill, which will soon be presented to Parliament,” said the DPE. “The national airline will not be liquidated.”
The emergency budget of Finance Minister Tito Mboweni in June did not allocate any financing to SAA. The troubled state airline needs at least R10 billion in short, medium and long-term funds to restart operations, of which R2 27 billion is earmarked for voluntary severance packages (VSP) for at least 3,000 workers.
The DPE said it would ask lenders to finance the SAA’s restructuring process and fulfill commitments to pay VSPs and layoffs of workers.
It said it will also continue to evaluate the 20 unsolicited expressions of interest from private sector funders, private equity investors and partners.
SAA’s Business Bailout Practitioners (BRP) gave the government one more week on Friday to obtain the funds needed to prevent the airline from being liquidated.
The BRPs told the airline’s creditors that the government has pledged to provide them with a R10.5 billion lifeline with no deadlines yet confirmed. Rescuer Siviwe Dongwana said the government had written to them prior to the meeting to confirm that it would fund the rescue process.
He said the government’s letter clearly indicated that there was a commitment from the Cabinet, with the support of the National Treasury, to provide funds to the SAA of R10.5 billion.
Dongwana, however, refused to release the letter from the National Treasury.
“The letter also articulates that the mechanisms and timelines have not yet been finalized,” he said, adding that the BRPs will engage with the government in detail to gain a clearer understanding.
During the following week only, SAA rescuers will be in a position to notify creditors if the rescue plan will be implemented or if SAA will be liquidated.
“It is important for us as professionals to assess the timeline of the availability of funds to answer whether or not a liquidation or liquidation case remains and to advise creditors accordingly,” Dongwana said.
“But if the funds flow in early enough, they eliminate the need for a reduction or liquidation.” This week, the government told BRP that it anticipated the required financing would be available on Wednesday.
However, rescuers had not heard anything on Thursday, prompting them to call a meeting with creditors. Dongwana said that the commitments to pay various affected parties remained intact as the business rescue plan that was voted on and approved on July 24 had not been changed.
“We committed R 600 million to competing creditors that would be payable over a three-year period. That remains and has not been amended, ”Dongwana said.
BUSINESS REPORT
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