SAA after Business rescue

[evanb]

Yes, remember African Bank who were R8 billion in the red, were saved using this method?

Africa Bank is a good example. The difference though was that Africa Bank's debt was almost all unsecured bonds so it was relatively easy to convince the bond holders to take a haircut and restructure terms.

Business rescue wouldn't allow the appointed practitioner to have a "temporary moratorium on the rights of claimants", because those rights are not against SAA but against the guarantor (i.e. National Treasury).

[GL]

Business rescue would free SAA from political interference - the "culture of Malfeasance' could be tackled head on - and prosecutions begun, that would deter others and start hacking away the bloated and inept management. A JV or an equity partnership could be sought without Cyril having to watch his back from the comrades.
Preferential procurement could be ruthlessly cleaned up- saving possibly R2bn
Employment - the practitioner could still cut R1bn of the TCE.
Route restructuring: grow into profitability - better codeshares metal neutral JVs etc = R1bn
Revenue enhancement - Cargo - needs a proper business manager.
Mango - operate regionally
Oh and by the way - kill off SAX
I reckon that with management skill and visionary leadership there is R5bn worth of improvement to the bottom line = probably profitable. But it needs a free business hand.

[GL]

https://www.timeslive.co.za/news/south- ... ss-rescue/
Government pre -empts solidarity

[Burner]

[ZX357]

Perfect opportunity for a willing investor/partner to step in and run the airline properly

[African Flyer]

Perfect opportunity for a willing investor/partner to step in and run the airline properly

Let's see if Branson takes the bait

[HAAN]

Media Statement

[Deanw]

5 Dec 2019: Fin24

Business rescue and SAA: A last lifeline before liquidation

The board of flag carrier South African Airways has confirmed that it has adopted a resolution to place the struggling carrier into business rescue.

This follows the leaking of a letter on Wednesday evening from President Cyril Ramaphosa to Cabinet stating that the national airline must enter voluntary business rescue, which brought months of speculation about how the state would try to save the cash-strapped airline to a close.

Ramaphosa's remarks were included in a letter signed by presidency director-general Cassius Lubisi, which was dated December 4. In the letter, Lubisi writes that business rescue is the only 'viable route" to stop an "uncontrollable implosion" of the airline.

SAA, meanwhile, in a separate statement on Thursday morning said that the decision to enter business rescue was the considered and unanimous conclusion" of the board in order to "create a better return for the company’s creditors and shareholders". The department of public enterprises said business rescue was the "optimal mechanism to restore confidence in SAA".

But what does business rescue mean?

According to the Companies Act of 2008, if a company cannot pay its debts and risks becoming insolvent within six months, its board can apply for it to be placed in business rescue, or a court can order it.

The goal of a business rescue application is to help the company get back on its feet and continue trading and operating. Under liquidation, on the other hand, a company's assets are sold off and it is shut down.

Once a company has been placed in business rescue, a business rescue practitioner is appointed with wide-ranging powers. The company's board, usually its highest decision making body, must run all its decisions past the practitioner, who assumes "full management control of the company".

Investigate, develop, implement

The role of the practitioner is, according to the act, is to first investigate whether there is a prospect that the company can be saved, and then to develop, publish and - if approved - implement a rescue plan.

Cape-based law firm Herold Gie Attorneys previously told Fin24 that business rescue provides a financially distressed company with the opportunity to restructure and pay its creditors and save jobs, while it continues to trade as an economically contributing entity.

"The act also offers a ‘moratorium’ on legal proceedings or liquidation procedures against any company that is in business rescue," he told Fin24.
This point was stressed by trade union Solidarity in mid-November, when it announced that it had lodged an application to have the airline placed under business rescue. While Solidarity was not mentioned in Wednesday's letter, its chief operating officer Dirk Hermann said on Wednesday evening that its application had forced the state's hand.

Hermann added that Solidarity's legal team will be meeting with SAA and government ministers on Thursday morning to plot a way forward.

Crafting a plan

According to the Companies Aact, if a practitioner believes there is a prospect to save the company , he or she must publish a business rescue plan after consulting with creditors, the company's management and other affected persons - which is the case of SAA will likely include the department of public enterprises. After the pan has been published, the practitioner must call a meeting of creditors, and in SAA's case the government, to vote on the plan

According to Phatshoane Henney Attorneys, business rescue can be described as a last lifeline before liquidation.

"Business rescue compared to liquidation provides for the company’s debt to be managed and contracts restructured and reorganized in order for the company to continue to trade on a solvent basis rather than selling off all of the company’s assets and the company being shut down as in the case of liquidation," it said in an opinion.

"The business rescue process is therefore a last lifeline to try and turn a company around before it has to close its doors when liquidated."

[ARM505]

Media Statement

So, more cash for SAA. Surprise surprise. I shouldn't have expected any less I guess Anyway, even to my eyes, some of that stuff is pure fantasy. Points 1,2,4,5,6 for example.

[nomie]

So the government, as main creditor, is now basically in full control of SAA as it can approve or decline any plan put forward by the business rescue practitioner if I read the article correctly?

[Izak]

I just wonder what Business Rescue means for the employees.
Will they be paid at the end of December? - especially considering the fact that there were issues with their pay at the end of November and it is unclear if the R2billion was obtained from the government.

Tough times ahead!

[snoopy]

Employees will be ok initially, but a BR plan needs to be tabled within 25 days of the appointment of a BRP now.

SAA directors will have limited power during this period.

If the BRP establishes that the over staffing is one of the company's weaknesses that led to its position, that will be addressed in the plan.

From the letter published by Government - it appears they decided to rather go the voluntary route than be forced by the High Court.

SAA must have passed the BR test - for this to transpire which means it would not have been able to pay its creditors and bills within the next 6 months. Otherwise a BR would not be approved for the company.

@ Hannes, Interesting media statement that - no release date...Points to poor standard even in state PR.

[IKTAV]

Personally, I believe it’s a good thing. Because it gives the BR practitioner carte-blanche to tackle all the dodgy procurement agreements and deal ruthlessly with corruption. Up until now, no one has had the guts to do that.
AND, most importantly - it takes the cANCer out of the business decisions around SAA.

[snoopy]

Agreed its the best for all, but its going to be tough on SAA's creditors. But at least they get to vote on the plan.

If this plan fails , and the BRP sees no reasonable prospect of SAA being rescued, he would most likely file for termination and liquidation of SAA.

[nomie]

Personally, I believe it’s a good thing. Because it gives the BR practitioner carte-blanche to tackle all the dodgy procurement agreements and deal ruthlessly with corruption. Up until now, no one has had the guts to do that.

But how? The rescue plan needs to be approved by the government?