Should their condition not be met, the business rescue plan will be deemed unimplementable
THE CREDITORS of South African Airways (SAA) voted overwhelmingly to give the Department of Public Enterprises until Monday to amend a paragraph of the business rescue plan for the airline pertaining to the honouring of guarantees.
In terms of the vote it was agreed that should their condition not be met, the plan will be deemed unimplementable and a meeting will be held on July 30 for the creditors to amend the plan. Should this not be possible, the creditors will move for liquidation of the airline.
“Should the conditions set out in paragraph 42.1 not be fulfilled by July 27, 2020, the business rescue plan will be deemed unimplementable and a meeting of creditors will be convened on July 30, 2020 for creditors to consider amending the business rescue plan, failing which for the BRPs (business rescue practitioners) to discharge the business rescue,” the business rescue team said on Friday.
“Such a meeting will be convened in terms of section 151 of the Companies Act.”
At issue is the form of a guarantee confirmation letter assuring the Development Bank of Southern Africa and other lenders that guarantees issued to them will remain “in full force and effect” until the debt is covered.
The lenders want R16.4 billion of government-guaranteed loans be paid back to their accounts, instead of paid over to the airline to meet its obligations.
“The outstanding condition is in relation to the guarantee confirmation letter that is required by the lenders, which was prepared and sent to government for signing off,” the business rescue team said.
The condition is largely considered a technical detail – the national budget provides for R16.4 billion to meet the airline’s obligations to lenders – but a potentially deal-breaking one.
In terms of the business rescue agreement, the government will uphold guarantees and find R10.1 billion in funding to pay for the retrenchment process envisioned in the plan and to cover the operational needs of the airline.
The future of the loss-making airline has hung in the balance for months as business rescue practitioners appointed in December wrangled with government over funding commitments for a restructured venture
The business rescue plan was finally approved earlier this month.
– African News Agency (ANA)