Mango rescue practitioner heads to court in bid to get funds for restructure
Mango's business rescue practitioner Sipho Sono is heading to court in a bid to access the remaining funds government allocated to the low-cost subsidiary of South African Airways (SAA).
Parliament approved a special allocation of R819 million for Mango's restructuring, from R10.5 billion allocated to SAA by Treasury. According to Sono's latest business rescue status update report released on Friday, the Department of Public Enterprises (DPE) transferred R399 million - the balance still owed of the R819 million - to SAA in March. To date SAA has, however, only transferred to Mango R89 million of the R399 million required for "certain urgent payments".
However, the DPE has set certain conditions before SAA can transfer the rest of the money.
An indication of what these conditions are can be found in a written response to Parliament by Public Enterprises Minister Pravin Gordhan, dated 29 April.
Gordhan explains that the R819 million was only for Mango's restructuring purposes and that SAA may only pay over the balance on condition that firstly, the business rescue process must be completed around the end of April 2022; and secondly, a viable strategic equity partner (SEP) for Mango must be identified "that has financial capacity to fund the airline after it exits the business rescue process".
The process to find an SEP was initiated early in December last year and Gordhan expects it to be finalised in the next few months. Mango went into voluntary business rescue at the end of July last year and has not flown since. It owes R2.85 billion to creditors, and also has about R183 million of un-flown ticket liabilities.
The airline cannot resume operations until and unless it secures a new investor to buy and relaunch the airline, because SAA has indicated that Mango does not form part of the deal by which the Takatso Consortium will obtain a 51% stake in SAA.
Sono says in his latest report that he regards the conditions set by the DPE as unjustified and not in accordance with the approved business rescue plan. He wants the balance of the funding still owed to Mango to be paid over by SAA "unconditionally and without delay".
Furthermore, he is concerned that the refusal by SAA and the DPE to transfer the balance of funds could have a negative impact on the investor process.
According to his latest report, the process to find a suitable investor to buy Mango is at an advanced stage. Early in April Sono received four binding offers from qualifying bidders. Bid offers will, among other things, be evaluated on price offered, source of funding and B-BBEE status.
