Business | Business News
An entity owned by SA Express workers has secured two anchor investors, Imperial Capital and the Landile Shembe Foundation, to help the airline restart its operations.
The R250 million that is expected to be raised from the two organisations, will go towards recapitalising the beleaguered airline, according to Fly-SAX spokesperson Thabsile Sikakane.
The transaction is subject to approval by, among others, the airline’s provisional liquidators and the Department of Public Enterprises (DPE). The transaction is expected to be completed in “early 2021,” Fly-SAX said in a statement.
Fly-SAX, which was founded by a group of the airline’s workers earlier this year, won the bid to buy the beleaguered airline in September.
According to its bid proposal, the Fly-SAX group will own 25% of the airline, while 27% will be owned by the government or a strategic equity partner and 48% by investors from crowdfunding platform Uprise.Africa and the anchor investors.
Imperial is an Abu Dhabi-based private fund and investment company. It has over R9.9 billion in assets under management with interests in energy, healthcare, education, infrastructure and manufacturing.
The Landile Shembe Foundation controls the commercial rights of the Shembe family’s diversified assets valued at over R762 billion.
The Shembe family runs the 109-year-old Nazareth Baptist Church based at eBuhleni in Durban. The church has a membership of 6.7 million people.
This would be the foundation’s first venture into the aviation industry, according to its chief executive Landile Shembe.
He told Moneyweb on Tuesday that despite the drastic drop in passenger air transport numbers due to Covid-19, the aviation industry remains attractive for investment.
Additionally, the airline’s proposed ownership and crowdfunding model “ensures that the airline is the people’s hands”.
SA Express was also a casualty of Covid-19. The airline’s fleet was grounded in March due to the outbreak of the pandemic, causing it to forfeit much-needed revenue.
However, even prior to Covid-19 the airline was in financial distress, leaving it unable to pay its staff and creditors. In February, it had a debt burden of R11.3 million and was placed under business rescue.
Shembe said the mismanagement of the airline that was seen under its previous board should not be repeated. As such, the foundation has made various “demands” as to how and who should be responsible for running the airline to ensure its profitability.
Although government is still expected to be one of the airline’s shareholders, Shembe said the foundation has been assured that there would be minimal interference in the day-to-day operations of the airline.
Sikakane told Moneyweb that discussions with the airline’s shareholder and provisional liquidators regarding its shareholding are yet to be held, adding that the DPE has “not communicated [its] interest in keeping any shareholding” in the future entity.
The airline requires R250 million in start-up capital, according to the bid proposal – and 20% to 30% of this will be required from the anchor investors before the airline’s profile can be opened up on the Uprise.Africa platform for crowdfunding investors.
This article first appeared on Moneyweb and was republished with permission.
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