The controversial sale of the embattled South African Airways (SAA) to Takatso Consortium, has collapsed.
This was announced by Public Enterprises Minister Pravin Gordhan during a media briefing in Cape Town.
“Over the past three years, the Department of Public Enterprises and Takatso Consortium has been negotiating the transaction to sell 51% of SAA.
We regret to announce that both Department of Public Enterprises and Takatso agreed that negotiations on the transaction have been terminated as there was no agreement on the revised transaction structure.
This arises largely from a new business and asset valuation undertaken by professional firms,” said Gordhan.
He said the sale was necessary at the time, as SAA was on the verge of being liquidated.
According to Gordhan, to help save the airline, its board placed it under business rescue, which government supported.
“After that, the country went through the COVID-19 pandemic, and it impacted on the global aviation.
The closure and opening of borders required government to search for a strategic equity partner as directed by Cabinet,” added Gordhan.
The Minister said two valuations were then undertaken, the first during the COVID-19 period when the airline was not flying.
The business and the properties were valued at a liquidation asset valuation methodology and this amount to R2,4 billion, and the business was valued at between 0 and negative.
“However, in the last year three years it became clear that the market conditions have changed, the economy had improved, the demand for flying had increased formidably and this required that a new valuation be done.
The business valuation came out at R1 billion and the property valuation at R5.5 billion.
This meant that there was a net increase in the property by R3,1 billion in the value of SAA.
The equity value had increased from 0 to R1 billion,” explained Gordhan.
The controversial transaction was approved by the Competition Tribunal, albeit after a lengthy period, and subject to certain conditions including the divesture by Takatso of its minority shareholders before the implementation of the transaction.
The collapsed deal will now seer SAA revert to be 100% owned by the state and that a corporate plan needs to be devised by the board and the management of SAA.
“The new corporate plan will embrace more routes and more aircraft.
In order to support these next steps an aviation strategy advisor will be brought to support the Board and management.
The Board needs to be strengthened further,” said Gordhan.
In addition, the Minister said a new form of raising finances based on the assets of SAA will be explored with financial institutions.
Despite the latest developments, Gordhan assured SAA employees that their jobs are safe, and that he will address them on Friday “to fully take them on board on this matter.”
