An unnamed consortium bidding to rescue South Africa's stricken state domestic carrier Mango Airlines (JE, Johannesburg O.R. Tambo) has presented "adequate and satisfactory proof of funding in the form of a bank confirmation letter" to the airline's administrator.

This is disclosed in Mango's latest status update to creditors by administrator Sipho Sono, who said: "Significant progress has been achieved with one of the bidders".

He said the consortium had been given until August 10, 2022, to provide a bank guarantee in favour of Mango for the full purchase offer. If this condition is met, Sono would - under the terms of South Africa's Public Finance Management Act - prepare a detailed proposal for the government to consider the offer per the adopted business rescue plan. The proposal would be submitted by Mango's parent, South African Airways (SA, Johannesburg O.R. Tambo), to the shareholder representative, the Department of Public Enterprises (DPE).

Should the government approve the offer, Sono would process the dividend distribution to creditors, whereafter he will file a notice of substantial implementation of the business rescue plan. Sono said he would engage with SAA and the DPE to agree on the next steps, timelines, and announcements as soon as the bidding consortium had provided the bank guarantees.

After presenting their offer, the consortium on July 28 had executed a share subscription agreement that allowed the consortium to subscribe to shares in Mango "for a consideration equivalent to the agreed purchase price". The value of the purchase price was not revealed.

In a previous creditors' update, Sono said the offers of the preferred and reserve bidders would be funded by their offshore partners.

The airline's only remaining asset of value is a spare engine and offers for its disposal have already been received. Sono would accept the best offer should he conclude that the investor process has failed.

The deal will still require regulatory approval, amongst others, from the South African Competition Commission.

Mango's investor process commenced on December 2, 2021, after creditors adopted an amended business rescue plan. Six bidders were shortlisted, and four binding bids were received by April 7, 2021. Only two of these met all the requirements. A preferred- and a reserve bidder were selected.

Mango's amended business rescue plan of November 2021 stipulates the winning bidder will acquire all shares in the company "for a nominal consideration". Immediately after the sale date, the investor will subscribe to additional shares in the airline to ensure there are funds to pay concurrent creditors, who will receive an initial settlement estimated at ZAR0.04 (USD0.002) in the rand, following a so-called payment waterfall. The balance of claims of concurrent creditors will be ceded to the investor at face value for a nominal consideration. The investor will convert the debt into equity to restore the company to solvency.

Holders of ZAR183 million (USD10.9 million) worth of unflown tickets will be issued vouchers to be redeemed over 12 months after services resume.

Should the deal fail and a reserve bidder not step in, Sono would liquidate the airline. In that case, all claims of concurrent creditors would be compromised/erased under the terms of the business rescue plan.

Mango has been in voluntary business rescue since July 28, 2021. It has been mothballed until an investor is found after sole shareholder SAA decided to divest from the subsidiary.