ALL conditions precedent for SAA’s business rescue plan have to be met by Wednesday (July 22) for the plan to succeed, the BRPs confirmed on Friday.
They are to publish a report – confirming whether or not this has been achieved – to all affected parties on Thursday (July 23), according to their spokesperson, Louise Brugman.
In a communiqué to affected parties on Friday, the BRPs failed to mention the letter of support, signed by Public Enterprises Minister Pravin Gordhan and Finance Minister Tito Mboweni, delivered to them on July 15. In this, the Government has committed itself to “mobilising funding for the short-, medium- and long-term requirements to create a viable and sustainable new SA national airline”, according to a statement by the Department of Public Enterprises (DPE). Whether this means “providing” funding has not been clarified. No one has explained where these extra billions will come from. The DPE’s claims that potential equity investors are lining up, remains unproven.
The letter – slammed by opposition parties DA, IFP, UDM and the Free Market Foundation (FMF) – comes as Treasury is trying to stabilise Government finance and cut spending to slow South Africa’s debt burden. Tito Mboweni’s consistent stance to date has been that there is no money to rescue SAA. Treasury is already committed to repaying SAA loans to banks totalling R16,4bn over the next three years. To restart SAA, it will have to find another R10,1bn over the same period, including R2,8bn in immediate start-up costs for July and August.
“This preposterous attempt to resurrect SAA, as envisaged by the DPE, is a phoenix-rising fantasy at the expense of the poor, who will be deprived further of essential services and infrastructure,” the FMF charged. It labelled the rescue plan as “deeply flawed” as the practitioners were unable to carry out their task without political interference.
FMF ceo Leon Louw said: "Despite not making a profit since 2011, receiving over R31bn in the last decade and demanding another R35bn now of citizens' money – make no mistake Government doesn't have any of its own as the only cash it gets is from us – the DPE, irresponsible unions and the banks whose loans are guaranteed debt, believe that SAA deserves another chance to waste taxpayer money and deprive the poorest in society of essential services and infrastructure, while subsidising the rich to fly. Utter lunacy. Twaddle continues to be spoken about a national state-owned airline being essential to support tourism, but South Africa's tourism industry, which is on its knees begging for financial assistance, is being ignored by government."
Apart from the government’s letter of support, other precedent conditions to be met by Wednesday include an agreement with employees and trade unions on the reduced headcount and revised terms and conditions, failing which the
Section 189 retrenchment process will be continued or a new process initiated by July 22. Government also has to provide confirmation satisfying the Development Bank SA, PCF bank lenders and pre-commencement lenders that government guarantees issued to them will continue until their claims are discharged in full.
Should these conditions not be met by Wednesday (July 22), creditors will meet again on July 24 to reconsider the plan, failing which the BRPs will discharge the business rescue. However, should they be met, the plan will be deemed “substantially implemented”. The BRPs would then set up a receivership to deal with creditors’ claims; and a new SAA interim board and acting ceo, Philip Saunders, would take over, the BRPs said.
The full list of conditions can be found here: www.matusonassociates.co.za/saa/conditions
