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SAA asks lenders for R16bn

Aug 29 2016 11:39

Johannesburg - Cash-strapped national carrier has turned to banking and non-banking financial institutions to raise R16bn to meet its working and capital expenditure requirement as well as to consolidate its current debt portfolio.

The request for long term funding was placed in a newspaper notice.

According to the notice SAA invited proposals for rand funding (even though the source may be foreign) either by bank credit facility or other, secured and unsecured.

The ailing carrier rejected on Friday allegations of business rescue and possible liquidation.

Spokesperson Tlali Tlali told Fin24 on Friday afternoon that SAA has never been in a state where business rescue is needed.

"Business rescue, properly understood, means a company is unable to meet its financial obligations as and when they are due and payable. That, however, is not where we are at," said Tlali.

"There seems to be a misunderstanding of our going concern guarantee requirements. Some people suggest we need a guarantee in order to stay afloat now and we are saying that is an incorrect interpretation. SAA is resilient and has overcome challenges in the past."

He said SAA needs a going concern government guarantee in order to finalise its annual financial statements. The matter has been brought to the attention of National Treasury, which is the airline's shareholder representative and there are extensive, on-going engagements with the aim of finding a resolution and to provide certainty to all concerned.

He said SAA has neither defaulted nor been unable to meet its obligations to service its debts – a key determining factor to justify placing a company under business rescue. "Those advocating for business rescue are making an absurd misdiagnosis."

WATCH: Under-fire Gordhan reveals SAA deadlock will soon end

According to the notice published in the Sunday Times on Sunday, SAA is seeking secured and unsecured funding with a 3- to 15-year duration and wants to start drawing down the amount within two weeks of signing the loan agreement.

Three drawdowns are envisaged to start at the end of October, with the drawdown required two weeks from signature of the loan agreement(s), the notice read.

Bidders could submit proposals for part or all of the required funding from Monday until September 16.

Both National Treasury and SAA have not yet responded to requests for comment.

READ: SAA's Yakhe Kwinana can run, but she can't hide - Outa

In a statement issued on Friday, SAA said its board continues to do everything in its power to ensure SAA gets government guarantees. It has also engaged with Treasury on a licensing issue, which also relies on Treasury's financial assurances for its renewal by the end of September.

Finance Minister Pravin Gordhan said earlier this week a “good announcement” regarding SAA can be expected “shortly”.

"While it is true that the airline’s balance sheet needs to be strengthened, it is important to understand that its funding requirements, whether in the form of guarantees by the shareholder or a cash injection - which the airline has not received for more than a decade - are intended for future and not current or immediate obligations," the SAA statement read.  

 Tlali said SAA is not facing liquidation, as no such decision has been communicated by the SA government as the sole shareholder of the airline. SAA remains confident that solutions will soon be found.

WATCH: The implications if Gordhan is removed from office

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