SAA creditors back business rescue, financing details to follow
SAA’s creditors have given the stricken state-owned airline’s revised business rescue plan the green light, with 86% of them voting in favour of it.
This means the company’s joint business rescue practitioners, Les Matuson and Siviwe Dongwana, can finally move forward with a restructure of the airline’s business after their appointment in December 2019, and also removes from the table the prospect of a protracted liquidation.
The restructure requires R10bn. A total of 75% was needed to pass the rescue plan.
When presenting the result of the vote on Tuesday afternoon, Dongwana said there were “certain conditions” needed to ensure the implementation of the plan, such as government funding, and that was why they had allowed the department of public enterprises’ acting director-general, Kgathatso Tlhakudi, to make a presentation to the meeting spelling out the government’s commitment to rescuing SAA.
Dongwana said in line with that, the government had also told the business rescue practitioners that it was in full support of the plan “and committed to raising the requisite funding”. In this regard a “letter to this effect will be delivered to the business rescue practitioners” on July 15.
July 15 was the deadline outlined in the business rescue plan.
“We are looking forward to receiving that letter and that commitment to funding from the government.”
Dongwana thanked all the stakeholders who participated and continued to “support SAA during this very difficult process”.
“We believe this support, as well as the compromises made along the way, are absolutely critical if we are to ensure that business rescue as an instrument of our law succeeds in doing what it seeks to do for distressed businesses in our country. We would also like to extend our apologies to those we may have upset or rubbed up the wrong way. The intentions have always been noble and we have always wanted to do what is right for SAA, so please accept our apologies.”
Dongwana said the practitioners welcome the “approval of the business rescue plan with an overwhelming majority of those who voted”.
“It is an important step forward for the airline and provides the much needed certainty towards a restructured SAA”.
Earlier Tlhakudi said that while the restructuring project of SAA had been “reflected in some quarters as a vanity project of the department of public enterprises or that of National Treasury, this is far from the truth”.
Tlhakudi said SAA “taking to the skies again is important for the country and the region”.
He said the provision of essential air services for the repatriation of South Africans stranded due to the Covid -19 pandemic and the flying of critical medical supplies was made possible by SAA.
“We could not rely on other countries' carriers as they were grappling with the emergency brought on by Covid-19.”
Thlakudi said the integration of the region was also dependent on an “effective air route network due to the large distances between our economic centres”.
“Anyone who does business on the subcontinent can attest to this.”
He said the national economy was also dependent on international investment and trade and air connections were “critical in ensuring that South Africa remained in the sights of foreign investors”.
The department of public enterprises said in a statement that it welcomed "the vote in favour of a business rescue plan" for SAA and "applauds creditors and all stakeholders for realising that a new, restructured, competitive airline, born out of the old, is the best option to immediately take back to the skies and preserve the brand of a national carrier".
The department believed the "favourable vote is a much better outcome for creditors and SAA employees than liquidation", and said government was confident the implementation of the business rescue plan will balance the rights and interests of all parties.
"The priorities for the department are now to give effect to funding commitments by government for the business rescue plan,and appoint a new and reconfigured interim board for SAA."
The department said the interim CEO would be Phillip Saunders, "an experienced airline executive with a strong commercial background". He would "work closely with the interim board to appoint an interim management team that must implement a fundamental restructuring of SAA led by the new interim board".