Cape Town - Finance Minister Enoch Godongwana said his department was not aware about non-compliance regarding the business rescue practitioners at the national carrier, SAA.
“The National Treasury is not aware of any non-compliance to any legal prescripts in relation to SAA’s business rescue process as regulated by the Companies Act and the Public Finance Management Act,” Godongwana said.
Godongwana was responding to parliamentary questions from DA MP Alf Lees, who enquired whether he had found that all legal prescripts were followed by the Department of Public Enterprises, the board and executives of the SAA and the business rescue practitioners in the business rescue process that SAA was subjected to since December 2019.
Godongwana said the purpose of the business rescue process in terms of the Companies Act was to provide for the efficient rescue and recovery of financially distressed companies in order to to balance the rights and interests of all relevant stakeholders.
“The primary objective of business rescue is the development and implementation of a business rescue plan that either rescues the company by restructuring its debt and equity in a manner that maximises the likelihood of the company continuing in existence on a solvent basis; or results in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of the company,” he said.
The minister also said that SAA was placed into voluntary business rescue in December 2019 by its board of directors as they believed that the company was in financial distress, after which the airline’s business rescue practitioners took over the management of the airline.
He has yet to divulge the full details of the transaction of the sale of 51% in SAA to Takatso Consortium.
Last year, President Cyril Ramaphosa told Parliament that the quest for transparency in the SAA-Takatso deal was understandable and that the government needed to outline fully the terms of the transaction.
Public Enterprises Minister Pravin Gordhan said in November last year that the outstanding steps to complete the transaction were mainly the regulatory processes.
“These relate to the approvals from the Competition Commission as well as the Air Services regulatory processes; and R2.6 billion funding required for SAA to complete implementing the business rescue plan which initially was R3.5bn but has been reduced by R0.9bn payment made by SAA,” he said.
Gordhan said it was anticipated that the disposal of the shares would be finalised by March 2023 at the latest, depending on the outcome of the outstanding matters.
Meanwhile, Godongwana said various initiatives were under way across government to ensure that state-owned entities (SOEs) could become sustainable and fulfil their mandate without government support.
Godongwana also said many of the SOEs continued to rely on government bailouts.
“The 2022 Budget review outlined the need for a new framework for managing bailouts to state-owned companies to reduce fiscal risks and promote long-overdue reforms.
“The framework, when finalised, will link bailouts of these entities to a range of reforms needed to make them sustainable and efficient.”
He noted that some SOEs were a burden on taxpayers and SOEs received about R266.6bn in bailouts from the government between the 2012-2013 and 2021-2202.
Godongwana also said the bailouts crowded out important social expenditure.
“Starting last year, and going forward, any fiscal support to SOEs is accompanied by strict conditions to ensure that these SOEs fix their underlying structural challenges if they are to qualify for support from taxpayers,” Godongwana said.
Cape Times