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SAA's R16bn loan appeal more proof for business rescue - DA

Aug 29 2016 13:58
Matthew le Cordeur

Cape Town – South African Airways’ (SAA) advert for a tender of R16bn indicates the desperate financial position the airline is in and it should therefore be placed under business rescue, the Democratic Alliance (DA) said on Monday.

The 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.

READ: SAA asks lenders for R16bn

It is currently in a stand-off with Treasury over a R5bn guarantee it requires to submit its annual financial statements for 2015.

DA MP Alf Lees said business rescue will prevent the need for SAA to be bailed out yet again by the South African taxpayer.

“(It) will put the airline into the competent hands of business rescue practitioners and take it out of the hands of President (Jacob) Zuma’s close friend, Dudu Myeni and her apparently delinquent board now only constituted of four directors,” Lees said in a statement on Monday.

MUST READ: Gordhan’s refusal to sign two treasury guarantees is at the heart of efforts by President Jacob Zuma to have him removed from office, writes News24 editor-in-chief Adriaan Basson.

Lees has requested that Yunus Carrim, chairperson of the standing committee on finance, reconsider a request for an emergency meeting with SAA on Wednesday this week.

“SAA’s call for tenders to provide R16bn in loan funds to be available by the end of October, a mere two months away, indicates the desperate financial position that the SAA board under the leadership of Dudu Myeni finds itself,” said Lees.

“The airline has had more than a year to restructure its loan funding, but has instead arrogantly presumed that the state would capitulate and provide the additional guarantees of R5bn that Myeni had demanded first of then finance minister (Nhlanhla) Nene and then of Minister (Pravin) Gordhan.

“The botched attempt to restructure funding through BnP Capital with its outrageous fee of R49.9m seems to have been the only other attempt to find alternative funding,” said Lees.

Civil society group Outa claimed a victory in July when SAA dumped BnP Capital just as the Organising Undoing Tax Abuse took the airline to court. Outa chairperson Wayne Duvanage told Fin24 on Monday they will continue the court battle to ensure SAA executive and board members are held to account.

Ivan Herselman, Outa’s director of legal affairs, said last week that the resignation of Yakhe Kwinana from the board of SAA is “an insincere and selfish move which smacks of a self-preserving act by a person around whom the walls of an investigation are closing fast”.

Outa said Kwinana and Myeni will be declared delinquent directors in due course.

Lees said that the reported repayment of R250m due to Standard Bank is the tip of the iceberg, as much of the balance of the loans taken against the R15bn state guarantees are also likely to be reaching maturity and will require repayment in the normal course of business.

“Ms Kwinana, who resigned from the board last week, was clearly not exaggerating the very real danger of SAA being liquidated,” said Lees.

SAA spokesperson Tlali Tlali told Fin24 on Monday that the airline will revert to queries for comment. Treasury said it would be issuing a statement later on Monday.

The advert SAA placed on Sunday:


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