SAA exits business rescue after filing implementation plan with CIPC
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The government on Friday said it was in the final stages of negotiations with the preferred strategic equity partner for South African Airways (SAA) as business rescue practitioners (BRPs) have completed their job.
SAA BRPs on Friday exited the rescue process after filing a substantial implementation of their plan with the Companies and Intellectual Property Commission (CIPC).
This brought to an end 16 months of SAA’s protracted business rescue that began on 5 December 2019, costing more than R10 billion.
The Department of Public Enterprises (DPE) has welcomed the notice of substantial implementation filed by the rescuers, saying they were handing over to the SAA interim board a solvent business.
The DPE said the business rescue process enabled restructuring of SAA, reducing its cost base and its financial liabilities creating a sustainable baseline going into the future.
“However, this does not mean that the work is finished. The board and management will be developing and implementing an interim business plan to sustain the operations while a strategic equity partnership (SEP) is being finalised,” it said.
“The government is in the final stages of negotiations with the preferred SEP, and a purchase and sale agreement should be concluded in the next few weeks.
“This will enable capital, and much-needed technical and commercial expertise to be brought in to ensure a competitive flag carrier emerges.”
SAA has so far received R7.8bn of the required R10.3bn funding for the implementation of the plan.
In the rescue plan, there are liabilities that will be settled over the next three years, including concurrent creditors and unflown ticket liability.
The rescuers and the creditors have agreed to set up a receivership to manage the settling of these outstanding liabilities meaning that SAA will be relieved of the responsibility.
“A significant portion of the debt that hamstrung SAA has since been compromised and the balance thereof transferred to a receivership, a vehicle specifically intended to ensure the debt is paid over the next three years,” said the BRPs in a statement.
“Thus, the practitioners are leaving both a solvent and liquid SAA adequately set to continue into the future.”
The filing of the notice for significant implementation means the BRPs have discharged the business rescue and handed over the operations of SAA back to its interim board with immediate effect.
The interim board of SAA is mandated to oversee the strategic, financial, and operational management of the subsidiaries of the airline, SAA Technical (SAAT), Airchefs, and Mango.
The DPE said these subsidiaries would need to be restructured and in some instances, the case for continued existence must be assessed.
It said the board and management team would deal with all other residual legal matters including the retrenchment and the legal disputes in the courts with the labour unions and the pilots’ association.
BUSINESS REPORT ONLINE