The business rescue practitioner of Mango Airlines has labelled as “strange” a decision by public enterprises minister Pravin Gordhan to appeal a high court judgment ordering him to make a decision about the proposed sale of the low-cost airline.
Sipho Sono turned to the court in February to try to force Gordhan, who received an application for the sale in November 2022, to make a decision. Sono claims Gordhan wanted to see the business case of the selected investor before making a decision. Sono is concerned about sharing such information as Mango is likely to compete with its parent company, state-owned SA Airways (SAA).
Sono argued the minister does not require the details of the business case and due diligence process because Mango is being disposed 100%.
“It will be in private hands and there will be no financial risk for government. In addition, SAA will compete with Mango, so giving government the business case will mean giving information to a competitor. In any event, the airline licensing council will be the body tasked with the responsibility to safeguard public interest and that process will follow after the sale is approved.”
The high court ruled in September that Gordhan’s failure to make a decision in terms of the Public Finance Management Act (PFMA) about the proposed sale is unlawful and constitutionally invalid. Gordhan was ordered to make a decision within 30 days of the court order and provide reasons for the decision. If he failed to do so, the business rescue practitioner could then assume the sale was approved in terms of the PFMA.
The department of public enterprises issued a statement this week that sought to justify Gordhan’s decision to appeal. It said the application for leave to appeal was consistent with legal advice it had received on the case.
“The intention of this application is to ensure that all aspects of Mango’s business rescue process are transparent, legally sound and in the best interest of the public,” the department said. “This is not a stalling tactic or an attempt to undermine the need to bring finality to Mango’s business rescue process.”
The department said Gordhan is still awaiting information from Sono to enable him to make the decision on the PFMA application. It includes a detailed business plan to assess the viability of the consortium selected by the business rescue practitioner to buy Mango, comprehensive due diligence, and foreign ownership details to comply with SA laws.
While Sono disagrees with the views of the department of public enterprises, he does not believe it is appropriate to respond comprehensively to the statement in his latest business rescue report given that the issues raised are, according to him, the same ones already comprehensively dealt with in the high court’s ruling.
According to the latest business rescue report by Sono, he does not believe there is any merit in the arguments for appeal raised by Gordhan. Sono is taking legal advice on the matter.
“The decision to appeal the judgment is strange because the minister was not ordered to approve the application but to make a decision on the application based on information he already has in circumstances where it has been made clear that no further information can be provided to him for the reasons which are already dealt with in detail in the high court judgment and an appeal even if successful will not change that position,” states Sono. “If the minister believes his demands are rational, then he should be justified to decide the application in the negative and the matter would reach its logical conclusion.”
Sono further states the selected investor continues to keep the offer open pending the conclusion of the litigation. However, a risk that the investor may pull out should the issues under contention not be resolved timeously still exists.
In the event that the transaction or investor process fails, the rescue practitioner will implement the wind-down process set out in the rescue plan.
Sono has said in the past that he has undertaken a due diligence process.
Sono was hoping that Mango could restart operations in December 2021 — to benefit from the peak summer holiday season. However, Gordhan stipulated that an investor had to be found to get Mango off the ground again. He would, therefore, not allow the R819m allocated to Mango from government funding for SAA’s own business rescue to be used to get the airline to fly again.
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