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By Hein Kaiser

Journalist


Govt accidentally reveals SAA’s real value and it’s less than you think

The Competition Tribunal's approval brings SAA's sale closer as the Takatso consortium prepares to acquire a controlling stake in the airline for R51, raising questions about the deal's value and potential hurdles.


The day that SAA will be sold for less than a packet of cigarettes has drawn much closer following the Competition Tribunal’s approval of the deal earlier this week.

After more than two years, the Takatso consortium is a giant leap closer to acquiring a controlling stake in the airline for R51.

And in a quickly withdrawn statement on Tuesday, the department of public enterprises may have accidentally revealed more than it intended to about the mystery deal.

The statement raised serious questions about the proposed deal. Based on the deleted sections of the statement, Takatso will instantly turn R51 into equity worth R3 billion when the ink dries.

This, because government valued its 49% in retained shares at R3 billion, plus the R51 in cash.

That suggests SAA’s total value tally stand at R6 billion… and R51.

Guy Leitch, aviation analyst and editor of SA Flyer, said it represents an extraordinary return on investment for the Takatso consortium members.

But there are still a few hurdles.

READ: SAA closer to privatisation after Takatso deal gets thumbs up

A prerequisite of the Competition Tribunal for the transaction to go ahead is the exit of minority partners Gidon Novick and Global Aviation, who collectively hold 20%tof Takatso and potentially just over 10% of SAA.

Maths suggests a number close to the instant R600 million in value created for Novick and Global Aviation would be required to buy them out.

Should the pair exit Takatso, infrastructure investor Harith will be the sole member of the consortium. It will be required to inject R3 billion of working capital over three years.

The deleted portion of the statement detailed the application of these funds: “Takatso will also provide SAA with R3 billion capital injection to help the airline embark on further expansion of its route, grow its fleet and recalibrate its business model to attract more customers, create jobs and other economic opportunities without ever burdening the fiscus in the future.”

The DA’s Alf Lees said he was not surprised that the content was deleted.

READ: SAA’s ‘profit’ just doesn’t fly

“It provided unwelcome insight into a murky deal that’s been secretive from the start. It also anchors a buyout value that Harith would have to get close to in order to rid itself of Novick and Global Aviation.

“SAA is being given away for free. And public enterprises accidentally admitted as much in the withdrawn statement. The deal stinks.”

This is the first time there has been a statement from public enterprises that included a valuation of SAA.