National Treasury has raised concerns that government will have to source most of the funding for the partnership with Takatso Consortium to acquire embattled airline South African Airways (SAA).
The troubled airline was forced into business rescue, with rescue experts proposing either liquidation or a total airline restructuring.
Takatso Consortium, formed by investor firm Harith General Partners and aviation enterprise Global Aviation, emerged as the top bidder and eventually closed the deal.
The consortium which would acquire 51% of SAA after completion of a due diligence said its committed to a strong partnership with the state.
While it is expected that government will not contribute towards the deal, Bloomberg reports that National Treasury criticised the terms of the agreement, saying SAA represents a “contingent liability” as the government may be liable for specific costs.
The state will still be on the hook for outstanding “business rescue obligations” stemming from the company’s near 18-month bankruptcy proceedings, Takatso said in a separate statement.
Earlier this week, Finance Minister Enoch Godongwana labelled SAA as a fiscal drain, adding the disposal of the government’s shareholding in the airline is justified.
Godongwana and Public Enterprises Minister Pravin Gordhan briefed parliament’s Standing Committee on Public Accounts (Scopa) on disposing majority of the government’s shareholding in SAA, the Annual Report of SAA and the financial statement.
“Since it was taken out of Transnet in 2007/8 it has cost the state, to date, R49 billion. So, there’s no doubt that it has been a fiscal drain,” said Godongwana.
Takatso will be totally responsible for the operation of the ‘new’ SAA, and seems to have a fairly free hand in determining the future of the airline.
The agreement makes provision for certain absolute rights, in that government has veto rights in some decisions.