IF Minister of Public Enterprises Pravin Gordhan is good at, it is playing media.
The same media he ‘chucked out’ at Parliament during presentation, on the very controversial Takatso deal he wanted to keep as private as possible from the public, who are shareholders in SAA.
Many aviation experts and trade unions including (SAFTU) also questioned the timing of the deal and why some its T&Cs were not made public.
Boom, on Wednesday, the very same Gordhan, who will not return to Parliament, announced the deal with privately owned Takatso Consortium will no longer be business viable and its OFF, as a result.
This was after the cabinet meeting this week, which was fierce, a decision was taken not to go ahead with the deal shrouded in secrecy.
In June 2021, Gordhan announced the sale of a 51% shareholding in SAA to Takatso Consortium, which initially included Harith General Partners (an infrastructure company that owns Lanseria Airport in Gauteng), Global Aviation and Syranix (both of which are partners in the aviation industry and co-owners of SA’s newest domestic airline, Lift).
According to the out-going Minister at the press brief on Wednesday, Takatso had not raised the initial money and the growth strategy for SAA was unclear, and how much Takatso would shell out to the government for a 51% shareholding, as part of Strategic Equity Partnership processes.
The minister said that as it stands, SAA would be able to sustain itself for the next year to 18 months.
“We want to make that clear; there’s no going back to the past there’s no reliance on government itself… [SAA] must run its operations as efficiently as it can and as profitably as it can and sustain itself,” said Gordhan.
“There are various other ways in which immediate financing can be obtained – but at no stage in the course of the months that come will SAA get money from the fiscus,” he added.
The Competition Commission ordered Global Aviation and Syranix to exit the Takatso consortium and sell their 20% shareholding in the consortium, with the competition watchdog raising concerns that the companies would be a dominant player in the commercial aviation industry, owing to their exposure to Lift and possibly SAA.
According to Daily Maverick it is understood that Global Aviation and Syranix had begun a process to sell their shares in Takatso and identified potential buyers.
Another problem was that Takatso (mainly Harith General Partners as the remaining investor in the consortium) promised to initially inject R3-billion into SAA to keep it going.
Takatso’s CEO Tshepo Mahloele alluded that no fee cost will be involved in the scrapping of the deal.
“Just like any other South African, we’re obliged to open talks with any aviation for business, since its our core line of business,” says Mahloele.
“Negotiations have been protracted, and the resultant revised transaction structure has introduced unacceptable levels of risk and uncertainty.”
“The terms of the proposed revised transaction are simply not workable for Takatso, and we could not, under those circumstances, allow this process to continue to drag on,” continued Mahloele.
SAA still carries a debt of at least R1.5-billion, which the government had to settle before the deal could be finalised. This was a condition that Takatso put in place before it injected the R3-billion.
Gordhan said that in a post-Covid lockdown, the value of SAA was below the R3-billion that Takatso was willing to inject into the airline.
He said a new valuation put SAA at about R1-billion, while its properties were separately valued at about R5-billion. However, properties take a long time to sell to free up cash and are not considered current assets.
Many questions still and will remain unanswered such as terms and conditions of the deal, amongst others, since he’s resigning.
Gordhan also made a promise to staff there will be no jobs lost to staff.
Peter Attard Montalto, the managing director at Krutham, believes SAA did not have the financial resources to last, and was likely to ask National Treasury for more financial support in the next two years.
“Presumably it won’t get any money then and will fold,” he was quoted.
Going forward, Gordhan said that the airline would turn its focus to implementing its corporate plan and expanding its route network.
Well, he might have played media, but the truth is finally out.
Image (DPE Minister Pravin Gordhan says the deal with Takatso will no longer take off).
