The third and last payment in terms of a receivership created to house the “legacy debt” still owed to SAA creditors is due in August. The receivership, a special purpose legal entity, was created to house SAA’s legacy debt separately so that the airline could exit business rescue.
The airline and its shareholder, the department of public enterprises, confirmed that R1.5bn of the original R3.5bn of “legacy debt” left when SAA exited business rescue in April 2021, is still outstanding.
As outlined in the approved SAA business rescue plan, the disbursements to concurrent creditors and lessors were to be paid out in three tranches over three years starting in August 2021. At that time creditors were still owed R3.5bn in terms of the rescue plan. According to SAA, the payment due this month will be paid from the R1bn received from the National Treasury in the 2023 budget.
“The last two tranches of the receivership were paid from SAA’s operating working capital, as the airline restarted with successful operations,” the airline responded.
Neither SAA nor the department have indicated whether they are planning to request a delay in the payment of the full balance of the R1.5bn in August.
SAA restarted commercial flights in September 2021 after stopping in May 2020, when the business rescue practitioners announced that the airline’s financial situation at the time did not allow for commercial flights to continue. The department also referred to the R1bn provided in the 2023 budget as towards the receivership payment this month.
The department said SAA put up about R1bn for the first two tranches. When the R1bn provided for in the 2023 budget is added to this, it still leaves R1.5bn. Neither SAA nor the department of public enterprises indicated where the remaining R1.5bn due will come from.
In his 2023 budget, finance minister Enoch Godongwana did indicate that the Treasury might allocate more money to SAA, but subject to certain conditions, which he did not elaborate on.
Strategic equity partner
“Consistent with what has been previously disclosed, government committed itself to settle all business rescue obligations pursuant to securing a strategic equity partner for SAA,” the department said.
The department selected Takatso Consortium in June 2021 to be SAA’s strategic equity partner to obtain a 51% stake in the airline. Investment firm Harith is the majority shareholder. The consortium has said from the start that it will not come on board until all SAA’s legacy debt has been cleared.
The department hopes the Takatso deal will provide the necessary cash injection to prevent government bailouts of SAA in future. The Competition Tribunal approved the deal, on condition that the minority shareholders in Takatso — who own and operate the LIFT airline — sell their shares to prevent a conflict of interest with SAA. The minority shareholders have appointed advisory firms to determine the market value of their minority stake and identify potential investors to buy these shares.
SAA went into business rescue in December 2019. When the Covid-19 lockdowns were imposed and the rescue practitioners could not get more funding from the government at that time, all flights were halted in May 2020.
SAA came out of business rescue in April 2021 and restarted commercial flights on a smaller scale in September 2021.
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