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SA’s minister in charge of embattled state-owned companies made an impassioned defence of the sale of a majority stake in the national carrier for about $3 (R51), a deal subject to a lawsuit from a spurned bidder.
The privatisation of SAA is a vital reform for the country’s battered economy, public enterprises minister Pravin Gordhan said in an interview at Bloomberg’s Johannesburg office. The winning bidder — a partnership between a domestic aviation group and private equity firm — was the one with the most credible financial backing and industry experience, he said.
The airline is an “example of a broken state-owned enterprise that has been loss making that we have successfully repositioned and got the private sector involved,” said Gordhan.
Discussions with ratings companies suggest the move is “a classic example of reform”.
The acquisition by the Takatso Consortium has been criticised in some quarters for the notional purchase price, lack of transparency around the sale and an ongoing government requirement to settle debts. The group is made up of Global Airways, which owns domestic airline Lift, and private-equity firm Harith General Partners.
The backlash culminated in a lawsuit filed last month by Toto Investment Holdings, which founder Bongani Gigaba said was unfairly excluded from the sale process.
The airline had been a drain on government finances for a decade, receiving many state bailouts before entering bankruptcy proceedings in 2019.
The terms of the transaction have been finalised between the parties and the deal is subject to approvals by SA’s competition regulator and industry body, said Gordhan.
As part of the deal, Takatso agreed to invest about R3bn in the airline.
“Their commitment remains in place,” the minister said.
SAA has been downsized significantly as a result of bankruptcy proceedings, with the workforce about 80% smaller. The carrier flies to nine domestic and international destinations with a fleet of six Airbus SE jets.
About 30 interested parties were considering a move for SAA, including two “fairly big” foreign entities, Gordhan said. However, when the bidding line up thinned out due to the devastating affect of Covid-19 on the travel industry, only Takatso was left with the necessary financial backing and aviation experience, he said.
“What is concerning is there is still a determined effort by some quarters to disrupt this process as much as possible and to raise suspicions around what has been a very legitimate and legal process,” the minister said.
More stories like this are available on bloomberg.com
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Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.