Johannesburg - SAA somersaulted yesterday on its controversial decision to appoint a little-known financier to handle the restructuring of its R7.2 billion debt after the Organisation Undoing Tax Abuse (Outa) threatened to take it to court over the transaction.
Outa said it had already filed papers with the South Gauteng High Court in Johannesburg to force SAA to cancel the deal.
Outa spokesman Ivan Herselman said the matter was to be heard in the South Gauteng High Court on Tuesday.
“Outa will use all avenues within its means to save SAA from abuse of authority and will be intensifying its investigations and legal actions as new information comes to light,” he said.
But SAA yesterday issued a detailed statement, claiming that it had terminated the BnP Capital deal out of its own will.
The transaction would have cost SAA R256 million as a handling fee for the little-known financier.
Under pressure
“SAA remains committed to ensuring that the financial management of the entire group improves and the airline’s finances are turned around,” SAA said.
The airline had been under pressure after details of the controversial deal revealed that it would pay BnP Capital a percentage to act as its financial services provider and to restructure its debt.
The deal sounded alarm bells when the airline’s treasurer Cynthia Stimpel wrote to the board advising it that boutique financier BnP Capital’s service fee was expensive. Stimpel was subsequently suspended two weeks ago, allegedly for contravening the airline’s code of conduct.
Yesterday, SAA defended the BnP Capital contract, charging that the boutique financier met all the requirements and scored the highest on both pricing and black economic empowerment requirements.
The airline said it had short-listed five companies to advise it on the debt after it disqualified two for failing to provide it with valid and current Financial Services Board (FSB) issue licences – a critical criteria for the transaction.
“The appointment of BnP Capital as transactional adviser was ostensibly in accordance with prescribed procurement processes and the award was made on March 20, 2016,” SAA said.
The airline said it had awarded the contract to BnP Capital after a potential lender was identified, but withdrew before the agreement was entered into. “In light of the sudden withdrawal by the potential lender, SAA was faced with a predicament and had to consider urgent basis alternatives to mitigate its risks associated with loans that were maturing within a month.”
The airline said it had cancelled the BnP Capital contract on Wednesday after it inquired about controversies surrounding the lender’s FSB licence.
The DA yesterday described the termination as a victory for the taxpayer and the economy. Spokesman Alf Lees said the BnP Capital contract was a small part of the reckless way in which SAA was being run.
“While we welcome this move, it does not go far enough to mitigate the financial chaos to which SAA has sunk,” he said. “We therefore reiterate the urgency for SAA to be placed under business rescue.”
BUSINESS REPORT