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South African Airways to be sold for $3 if deal is approved

South African Airways (SA, Johannesburg O.R. Tambo) has no cash value and will be sold off for ZAR51 rand (USD3) to the private sector Takatso Consortium, but the transaction remains unfinalised with no indication of when it is likely to be completed.

In return for a 51% stake, Takatso will inject ZAR3 billion (USD185 million) in working capital over two years (reduced from three years as initially stated) and pay the ZAR51 as its share of the nominal transaction fee required under South African law.

This is according to a clarification of the financial aspects of the privatisation deal provided by Public Enterprises Minister Pravin Gordhan, who said an independent expert valuation had placed the total consideration due to the government at “ZAR3,000,000,051 (USD185,201,801)”.

For its part, Takatso, in a statement on May 12, said: “Structures of this nature are usually characterised by a low purchase price and significant future funding commitments and are typically used for distressed assets such as SAA, which require extensive restructuring and recapitalisation to ensure a sustainable business model”....

SAA sale under parliamentary spotlight again

The partial privatisation of South African Airways (SA, Johannesburg O.R. Tambo) is under the spotlight again following revelations it does not have the sanction of the country's National Treasury.

The public spending watchdog Standing Committee on Public Accounts (SCOPA) has given SAA's shareholder representative, Public Enterprises Minister Pravin Gordhan, 14 days to provide more clarity about his deal to sell off 51% of SAA to the Takatso Consortium. "This is to ensure that when the committee meets to discuss the matter it is well informed of all the material facts and explanations required," SCOPA said in a statement.

This follows after Treasury Director-General Dondo Mogajane threw a curveball at Gordhan when he informed SCOPA that National Treasury had "played no role in the selection process of the preferred Strategic Equity Partner (SEP), including the conceptualisation, negotiation, and the finalisation of the terms and conditions relating to the transaction".

He said National Treasury had raised concerns about some of the terms and conditions agreed to between Takatso and the Department of Public Enterprises (DPE). "It must...

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