Imminent government approval is expected for the sale of Mango Airlines to an unnamed consortium following the resolution of issues raised by the board of parent South African Airways concerning the disposal of its shares in its subsidiary, according to administrator Sipho Sono.

An updated application for the sale of Mango was submitted to Public Enterprises Minister Pravin Gordhan on November 28, after issues "pertaining to the application for approval of the disposal of SAA's shares in Mango [...] in accordance with section 54(3)(c) of the Public Finance Management Act were resolved," Sono told creditors. With these issues now out of the way, he anticipated that Gordhan would consider the application imminently and, if satisfied, approve the disposal.

"The necessary sale-of-shares and share subscription agreements have been drafted and will be concluded in due course, subject amongst other things to the approval of the application by the minister," he explained.

Gordhan had stipulated that he wanted 30 days to consider and approve the application once SAA's concerns had been resolved. In terms of the PFMA, both the ministers of public enterprises and finance will have to consent to the sale.

Other regulatory hurdles still to be scaled include approval of the sale by South Africa's two draft regulators, the Competition Commission and the Competition Tribunal. The Competition Commission is the investigative and prosecutorial authority investigating anti-competitive conduct, which refers to the Competition Tribunal for hearing. The 11-member Competition Tribunal is, in effect, a court of first instance in all competition matters in South Africa.

The country's Domestic and International Air Services Licensing Councils must also approve the change of Mango's ownership. This would facilitate lifting the current two-year suspension of Mango's domestic licences.

According to Sono, a small contingent of staff in key positions has been retained on fixed-term contracts extended until March 31, 2023, for various tasks required during the implementation phase of the business rescue proceedings. Their contracts can be cancelled with one week's notice.

SAA first applied to sell Mango on September 30 but highlighted some areas of concern. Gordhan then directed these issues to be resolved before considering the application. Mango has not flown since it entered voluntary administration in July 2021.

The undisclosed offer for the state-owned carrier is likely to be "nominal" as stipulated by the airline's business rescue plan. Under its terms, concurrent creditors will receive almost nothing - an initial settlement estimated at ZAR0.04 (USD0.002) on the rand - following a so-called payment waterfall. The balance of their claims will be ceded to the investor at face value for a nominal consideration, who will convert the debt into equity to restore the company to solvency.