Business Rescue Practitioners (BRPs) Les Matuson and Siviwe Dongwana are set to implement South African Airways' turnaround plan after confirming that all the conditions necessary for business rescue had been met.
There had been consternation last week over the source of the ZAR16.4 billion rand (USD988 million) the BRPs had demanded in funding for the plan given the carrier's sole shareholder, the South African government, had kept mute since the plan was accepted earlier this month. However, ahead of a potential July 30 showdown with creditors where a possible liquidation scenario could have been voted in, the government has now stepped up and pledged funding.
"Please note that all the conditions set out in paragraph 42.1 were fulfilled on or before July 27, 2020 and the business rescue practitioners are currently attending to and finalising the remaining outstanding administrative issues before filing a notice of substantial implementation in terms of section 152 (8) of the Companies Act 71 of 2008, as amended," the BRPs wrote. "There will be no meeting on July 30, 2020 and the Plan has become unconditional and has come into operation."
Sources familiar with developments told Bloomberg the money would be put into a receivership by the government over the next three years and will be taken off SAA’s balance sheet. Finance Minister Tito Mboweni has said the funding will be sought from private investors such as “strategic partners,” or private equity, the news agency added.
The BRPs' plan requires ZAR10.3 billion rand (USD624.7 million) of which ZAR2.8 billion (USD170 million) will go towards working capital, ZAR2.2 billion (USD133.4 million) towards retrenchments, ZAR3 billion (USD182 million) towards reimbursements for unflown tickets, ZAR600 million (USD36.4 million) towards general concurrent creditors, and ZAR1.7 billion (USD103.1 million) will be left for lessors.
Sources told Bloomberg that lessors were originally owed around ZAR10 billion (USD606.5 million) but agreed to a significant haircut under unspecified terms.
