The R3bn capital injection put on the table by SAA’s suitor Takatso to expand the airline’s operations was the main drawcard in the government’s decision to sell it a majority stake in the national carrier, the department of public enterprises told the Competition Tribunal on Tuesday.
The tribunal, chaired by senior counsel Tembeka Ngcukaitobi, was hearing submissions from interested parties on the proposed deal that will see Takatso acquire a 51% stake in SAA, with government owning the rest. Takatso is a consortium in which Harith General Partners holds the majority shareholding, and Global Aviation and Syranix hold minority stakes.
The Competition Commission recommended in May that the merger be approved with conditions. One of the conditions for the deal’s approval is that Global and Syranix divest from the consortium due to competition concerns. This is because Global leases aircraft and also owns and operates the domestic passenger airline Lift while Syranix co-owns Lift’s trademark.
Ngcukaitobi pressed the commission, Takatso and the department on the mooted withdrawal of Global and whether what was before the tribunal was a different deal, lacking the technical expertise Global Aviation was supposed to bring to the table.
“The fact is that we need SAA to be operational. And there is a problem of whether SAA will be operational without a technical partner. How does your client [the department] see the future in the absence of a technical partner [Global]?” Ngcukaitobi asked the department’s counsel, Michelle le Roux.
Le Roux responded that SAA was already operating and gaining market share without Takatso’s participation and the question of lack of technical expertise does not arise.
“There will be a R3bn shareholder capital investment from Takatso. That is the rationale behind the deal, that ‘I am coming with my R3bn to accelerate the expansion’... the exit of Global and Syranix doesn’t change the fact that Harith controls Takatso,” Le Roux said.
“It is not a deal breaker that Global and Syranix are no longer there. They are not the purpose of the transaction. The purpose of the transaction is that Harith invests in the airline industry and SAA gets a capital injection.”
The commission also testified that the withdrawal of Global and Syranix did not alter the main components of the deal.
Kgathatso Tlhakudi, the dismissed director-general of the department, also made submissions, repeating his public statements that the deal was corrupt and undervalued SAA. His attorney, MacGregor Kufa, had the first bite at the cherry, accusing the department of graft.
“We can’t have a national asset being sold for R51 when the assets are worth in excess of R7bn... Takatso was created at midnight for the sale of SAA,” Kufa said.
Ngcukaitobi challenged Kufa to point him to evidence that the 51% stake in the airline was sold to Takatso for R51. Kufa said he based the figure on an “assumption”. “I can’t work on an assumption, I need evidence,” Ngcukaitobi retorted.
Tlhakudi went on to accuse public enterprises minister Pravin Gordhan of having facilitated the transaction corruptly. Tlhakudi was shown the door last month after being found guilty of gross misconduct by exceeding his legal authority and unlawful recruitment that prejudiced qualified candidates.
Takatso counsel Mike van der Nest sought to clarify the valuation of SAA and the price tag the consortium is paying for its 51% stake, saying the value of the deal is R3,000,000,051.
Van der Nest added that the valuation details of SAA would be submitted to the tribunal.
The tribunal stood down for deliberations and did not indicate when it will give its verdict.
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