Public Enterprises Minister Pravin Gordhan passionately defended the sale of a majority stake in SAA for around R51, a deal which is the subject of a lawsuit from a spurned bidder.
The privatization of SAA is crucial Importance of reform to the country’s struggling economy, Gordhan said in an interview at Bloomberg’s Johannesburg office. The winning bidder – a partnership between a domestic airline group and a private equity firm – is the one with the most credible financial backing and industry experience, he said.
The airline is an “example of a broken state – own Losing company that we successfully repositioned and brought in the private sector,” Gordhan said.
Talks with ratings firms suggest the move is “a classic example of reform”.
The takeover by the Takatso consortium has been criticized in some circles for the fictitious purchase price, a lack of transparency surrounding the sale and an ongoing government demand to pay off debts. The group consists of Global Airways, which owns domestic airline Lift, and private equity firm Harith General Partners.
The backlash culminated in a lawsuit filed by Toto Investment Holdings last month, as reported Founder Bongani Gigaba said it was wrongly barred from the sale process.
The airline had been a drain on government finances for a decade and received many government bailouts before filing for bankruptcy in 2019.
The terms of the transaction have been finalized between the parties and the transaction is subject to the approval of SA’s competition regulator and industry body, Gordhan said.
As part of the transaction, Takatso agreed to invest approximately R3 billion into the airline to invest.
“Your commitment remains,” said the Minister.
SAA has been significantly downsized as a result of the bankruptcy proceedings, wobe i the workforce was reduced by around 80%. The airline flies to nine domestic and international destinations with a fleet of six Airbus jets.
About 30 prospects are considering switching for SAA, including two “fairly large” foreign companies, Gordhan said. However, as the bid list thinned out due to the devastating impact of Covid-19 on the travel industry, only Takatso remained with the necessary financial backing and aviation experience, he said.
“What is worrying is still there determined efforts by some circles to disrupt this process as much as possible and arouse suspicion, which was a very legitimate and legal process,” the minister said.
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