SA Express’s anchor investor was supposed to provide the balance of the R50 million purchase price of the airline last week, but this has failed to materialise, according to the airline’s liquidator Aviwe Ndyamara.
The investor’s failure to meet the deadline to provide the bank guarantee means the airline faces final liquidation.
Ndyamara told Moneyweb that the required proof of funding from the anchor investor has not been received.
Instead, what was received by the Thursday deadline were some “unsigned [Microsoft] Word documents”.
“I do not recognise that document as a bank guarantee and we have not received the bank guarantee,” he said.
SA Express, which has been under provisional liquidation since April last year, is set to be owned by worker-owned entity Fly-SAX after the entity was chosen as the preferred bidder in October.
Despite the unambiguous statement by the liquidator, Fly-SAX is still confident it can get the airline off the ground.
It contends that the unnamed anchor investor has provided the R26 million required to finalise the sale of the state-owned airline.
‘Bridging’ finance request
In a statement, Fly-SAX spokesperson Thabsile Sikakane said the entity has requested that the provisional liquidator raise the required working capital by using “the provided bank guarantee as [an] underwritten bank guarantee to bridge the third source of funding [crowdfunding] for working capital”.
“This is only possible if the shares of SA Express are transferred to Fly-SAX,” she said.
“This process would enable us to meet the requirements which are set as conditions to be eligible to be listed on [the] Uprise Africa Equity Crowdfunding Platform.”
The entity has already secured roughly R24 million from a sale of assets that were auctioned off last year.
Despite the long-drawn-out process of attempting to keep the airline from going under, Sikakane believes it remains viable.
“The possibility of the business enterprise being positioned to resume operations will result in the avoidance of a liquidation and thereby a loss of all jobs and to get better returns to the body of creditors than would arise under the alternative of liquidation,” she said.
“We are confident the outcome of this request will favour us, not only based on our previous track record but also our clear focus on transformation and creation of sustainable jobs.”
SA Express has been a serial underperformer over the past few years, and has failed to pay employee salaries since March last year.
The airline was placed under provisional liquidation in April 2020 after rescue practitioners were unable to secure post-commencement finance for the entity to continue operating. In January, its provisional liquidation was extended to April 29 to allow for the conclusion of the new shareholding agreement between the government and the liquidator.
Mismanagement, high operating costs, increasing fuel prices and low demand brought the airline to this point.
The airline implemented austerity measures in 2016 in an attempt to contain the rise in operating costs. However, this did not save it from incurring high levels of debt.
At the time the airline entered business rescue, it had incurred debt of R11.3 million.
The airline owes its creditors a total of R980 million.
This excludes the R150 million owed to the SA Revenue Service and R183 million owed to workers – comprising R81 million in severance packages, R43 million in leave pay and R59 million in outstanding salaries.
This article first appeared on Moneyweb and was republished with permission.