Takatso Aviation has confirmed that funders in the market were uneasy about its proposed takeover of a 51% stake in the national carrier South African Airways.
In a statement responding to Finance Minister Enoch Godongwana granting SAA a R1 billion debt relief intervention towards the Business Rescue Process which began in 2021, Takatso said the budgeted R1 billion will settle some, but not all, of the outstanding amount and therefore fell short of what it would have taken for the government to completely clear this obligation, which is one of the conditions for the finalisation of the SAA Transaction with the SEP.
The partial fulfilment of this obligation is not what Takatso Aviation had expected.
“We will therefore have to assess the impact thereof on progress of the transaction.”
“The unease Takatso Aviation funders have with signing-off on the release of the funds we’re mobilsing for our R3 billion commitment to SAA, while the outstanding BRP debt subsists, is an issue we have highlighted time and again. Part of the context for this unease is the well-known fact that this debt burden stems from SAA’s past financial distress. We therefore need to assess whether a partial fulfilment of government’s undertaking to clear this debt changes anything, in our financing process,” said Takatso Aviation Director Lizeka Matshekga.
SAA, in a statement by Spokesperson Vimla Maistry said the allocation is part of the government’s commitment to the business rescue process that SAA exited in April 2021. It will be used to cover outstanding liabilities, specifically those relating to the final dividend payment to creditors and the refund of legacy of un-flown tickets to affected passengers – which date back to the period when SAA was placed in business rescue in December 2019.
“SAA’s operations have progressed positively since the airline emerged from business rescue, and as reported to Parliament earlier this month, SAA is no longer technically insolvent, a milestone which we reached a year earlier than projected” SAA’s Executive Chairman and Chief Executive Officer, Professor John Lamola said.
SAA said The R1bn allocation is part of original R 3.5 bn that was needed for the carrier to settle all debt that the Business Rescue practitioners had ring-fenced into a Receivership.
Due to the financial performance of SAA and the innovations of its management team, the total balance expected from National Treasury has been reduced to R2.586 bn. The airline will continue to negotiate with the National Treasury for the balance of the funds and cooperate with all the conditions that may accompany the flow of these funds.
“SAA has reached a point where we cover our operating costs. It must be emphasised that the allocation announced relates only to historical debt. These funds are not meant to bolster the business plan we are currently executing.” The Chief Financial Officer, Fikile Mhlontlo said.
Takatso, in a statement by Spokesperson Thulasizwe Simelane said it affirmed its commitment to seeing the transaction to finality, and is currently engaged with the Competition Commission to finalise the merger clearance.
“Takatso Aviation is currently in ongoing engagements with government for an appraisal on the current situation with regard to the final settlement of its outstanding financing obligations emanating from the BRP. We look forward to more discussions with government in the coming weeks, on the BRP obligations issue, as well as the other conditions still to be fulfilled to accelerate the transaction to finality,” it said.
BUSINESS REPORT