A view of SAA airplanes at Cape Town International Airport on February 18, 2020.
Gallo Images/Jacques Stander
The business rescue practitioners of South African Airways announced on Tuesday that all the conditions in the embattled airline’s business rescue plan have been fulfilled.
There is, however, still no indication of where the R10.3 billion funding to implement the rescue plan will come from. So far government has only committed to “mobilising” funds.
The most crucial amount to start off with would be about R800 million for post-commencement creditors, about R2.2 billion for voluntary severance and retrenchment packages as well as about R2 billion for working capital.
The practitioners said in a letter to affected parties on Tuesday that they are currently finalising remaining outstanding administrative issues before filing a notice of substantial implementation of the rescue process as required by the Companies Act.
On 24 July SAA’s creditors agreed to give government a little bit more time to comply with an unmet guarantee condition required by the previously accepted business rescue plan.
The unmet condition related to government having to provide confirmation satisfactory to the Development Bank of Southern Africa and lenders, that the guarantees issued to them “shall continue in full force and effect until the lender claims are discharged in full as contemplated in the rescue plan”.
The plan stipulated that all outstanding conditions had to be met by 22 July, failing which creditors had to meet on Friday 24 July to vote on whether the plan could be amended. The creditors approved such an amendment, which gave government until Monday 27 July 2020 to comply with the outstanding condition.
One of the joint rescue practitioners, Siviwe Dongwana, informed the creditors at the previous meeting that, if the condition is not met by the extended date, the plan would be deemed “unimplementable” and a meeting of creditors will be convened on 30 July 2020 for creditors to consider amending the plan once again. On Tuesday the practitioners said there will not be a reason to have such a meeting anymore.
Peter Attard Montalto, head of Capital Markets Research at Intellidex, says he remains “deeply sceptical” that anything will emerge of any meaningful size or scope.
“Whilst the tortuous process of the business rescue practitioners now comes to an end, the airline still has no money and unions are getting restless,” comments Attard Montalto.
“Attention will now turn to the fact that air travel will be severely restricted and reaching break-even in three years will take major additional funding that banks and others will be unwilling to provide.”