SAA after Business rescue

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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by trees »

grjplanes wrote: Wed Dec 11, 2019 10:17 am
Ray W wrote: Wed Dec 11, 2019 9:25 am
grjplanes wrote: Tue Dec 10, 2019 11:32 am

Is it possible that Mango can take the A319s and make it work, how much life do they still have in them, will retrofitting be worth it?

Will Mango perhaps also be allowed to take over some of SAA's route rights regionally...maybe LVI and some of the other mulitple daily routes...if they could operate with both on a route ie: to WDH, HRE, LUN and MPM, say Mango do 1 of the 3 daily flights.
I don't think Mango have the capacity available with their current fleet to be able to take on more routes
That's why I'm asking regarding the possibility of the A319s being moved over to Mango as well?
I think that would be a pretty inefficient operation.
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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by Ray W »

trees wrote: Wed Dec 11, 2019 1:09 pm
grjplanes wrote: Wed Dec 11, 2019 10:17 am
Ray W wrote: Wed Dec 11, 2019 9:25 am

I don't think Mango have the capacity available with their current fleet to be able to take on more routes
That's why I'm asking regarding the possibility of the A319s being moved over to Mango as well?
I think that would be a pretty inefficient operation.
Why - mango have quite a good operational reputation
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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by Burner »

Ray W wrote: Thu Dec 12, 2019 1:03 pm
trees wrote: Wed Dec 11, 2019 1:09 pm
grjplanes wrote: Wed Dec 11, 2019 10:17 am

That's why I'm asking regarding the possibility of the A319s being moved over to Mango as well?
I think that would be a pretty inefficient operation.
Why - mango have quite a good operational reputation

I think he is referencing the idea of trying to operate two totally different aircraft types within an LCC.
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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by newelld »

Have there been any further developments on the business rescue process yet? As I understand the process, there need to have been meetings called by the practitioner by the end of this week with creditors and employees outlining the prospects of the rescue?
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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by LongRangeCruise »

SAA will survive. They’ve made subtle changes to the February 2020 schedule. Hong Kong is still on hold Indefinitely.
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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by GL »

SAA may not be too big to fail economically - but it is too big to fail politically.
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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by HJK 414 »

GL wrote: Tue Dec 17, 2019 9:14 pm SAA may not be too big to fail economically - but it is too big to fail politically.

Perhaps …….

Yet it raises the question - what to do about the failing politics ..?

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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by ZX357 »

https://m.fin24.com/Companies/Industria ... u-20191217

Does this mean that the "equity partner " will be brought in and effectively be planning and implementing the rescue plan?
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Anybody know ?

Unread post by Airwayfreak »

Anybody know if the strategic plan for SAA has been announced yet ? Staff and management are being advised today what the future holds.

My speculation :

1. SAA Cargo will go.
2. Domestic routes will be handed over to Mango.
3. Only profitable international routes will be kept.
4. AirChefs will go
5. SAAT will go
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Re: Anybody know ?

Unread post by Romeo E.T. »

Airwayfreak wrote: Fri Dec 20, 2019 12:30 pm Anybody know if the strategic plan for SAA has been announced yet ? Staff and management are being advised today what the future holds.

My speculation :

1. SAA Cargo will go.
2. Domestic routes will be handed over to Mango.
3. Only profitable international routes will be kept.
4. AirChefs will go
5. SAAT will go
Can't see SAAT "going", as SAAT does all the foreign aircraft handling, no SAAT = no international airlines = no tourists/etc/whats left of economy
SAAT also does ALL Mango aircraft, SAAT still does over 50% or so Comair(Kulula & BA)
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Re: Anybody know ?

Unread post by Airwayfreak »

Romeo E.T. wrote: Fri Dec 20, 2019 1:05 pm
Airwayfreak wrote: Fri Dec 20, 2019 12:30 pm Anybody know if the strategic plan for SAA has been announced yet ? Staff and management are being advised today what the future holds.

My speculation :

1. SAA Cargo will go.
2. Domestic routes will be handed over to Mango.
3. Only profitable international routes will be kept.
4. AirChefs will go
5. SAAT will go
Can't see SAAT "going", as SAAT does all the foreign aircraft handling, no SAAT = no international airlines = no tourists/etc/whats left of economy
SAAT also does ALL Mango aircraft, SAAT still does over 50% or so Comair(Kulula & BA)
Yes, most likely. That's why SAAT going was last on my speculation list
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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by GL »

BRP Press release:
Press release from Joint SAA Business Rescue Practitioners (BRPs), Mr. Les Matuson and Mr. Siviwe Dongwana

20 December 2019

SAA Business Rescue Practitioners present at First Meeting of Creditors

The joint BRP’s of SAA, Mr. Les Matuson and Mr. Siviwe Dongwana today convened the First Meeting of Creditors. In terms of the Companies Act 71 of 2008, the objectives of the first meeting were to inform creditors as to whether or not there is a reasonable prospect of a successful business rescue, to appoint a Creditors’ Committee and to receive valid claims from Creditors.

Les Matuson commented, “our primary objective of the business rescue process is to either rescue SAA through restructuring its affairs, business, property, debt and other liabilities and equity that maximizes the likelihood of the company continuing on a solvent basis or develop a plan that results in a better return for the company’s creditors or shareholders than would result from the immediate liquidation of SAA”.

“A vast majority of business rescue proceedings in South Africa have followed the second outcome”, noted Matuson

Opinion of the BRP’s

Based on the availability of further Post- Commencement Funding, which National Treasury has undertaken to provide and the ongoing support from all the stakeholders, including Government, Employees, Trade Unions and Trade Suppliers, the joint business rescue practitioners are of the opinion that that there is a reasonable prospect of a successful Business Rescue notwithstanding the inevitable risks and challenges.

Reasons not to liquidate SAA

The joint BRPs are of the belief that the Business Rescue Process will achieve a better outcome for all stakeholders than an immediate liquidation. PwC who has been mandated by the BRPs to prepare a short term cash flow forecast, performed an initial high level calculation. SAA leases most of the aircraft and accordingly in a liquidation, there will be limited assets which can be realized for distribution to creditors. The preliminary view is that after the allocation of the Distributable Proceeds to preferent creditors (comprising post commencement financiers, preferent claims of employees, post commencement unpaid lease payments) no funds will be available for distribution to concurrent creditors. The contingent and damages claims will crystallise on a liquidation which will increase the quantum of the concurrent claims which reinforces the preliminary view that the estimated dividend for concurrent creditors is zero cents in the rand.

Business Rescue Plan- Request for extension

In terms of section 150(5) of the Companies Act 71 of 2008 (“the Act”), the Business Rescue Plan (“Plan”) should be published by the company within 25 days after the date on which the business rescue practitioner (“BRP”) was appointed. Accordingly, the Plan should be published by 13 January 2020. The joint BRPs are currently evaluating various scenarios and funding requirements for each. Given that the different scenarios need to be communicated to the various stakeholders in order to determine their preferred scenario, the joint BRPs requested that the creditors approve an extension for the publication of the plan.

At the meeting Matuson requested that the BRPs be given until the latest 28 February 2020 to publish the plan but that they would endevour to publish as soon as they had a best possible Business Rescue Plan for the business. The creditors present voted unanimously in favour of the extension.

Actions to date

Since the appointment of the BRP on 5 December 2019, the team has met with numerous stakeholders, including the Department of Public Enterprise, National Treasury, Union representatives, International Air Transport Association and other trade partners, lenders, etc. As requested by the lenders, Alvarez and Marsal LLP have been mandated to provide an objective, impartial insight into the operations of SAA. On 18 December 2019, Mr. Siviwe Dongwana was appointed as joint BRP.

Proof of claims

Matuson explained to creditors that a claim form will need to be submitted such that all claims can be reconciled to the Company’s record and any discrepancies investigated.

Creditors Committee

The joint BRP’s are of the view that the input of a pro-active Creditors’ Committee will add significantly to the process and will be helpful to achieve the goals set out in the Business Rescue Plan. To that end an experienced independent chairman has been appointed to the SAA’s Creditors’ Committee. “An Independent Chairperson will guide the process appropriately and raise issues constructively without bias nor favour”, explained Matuson

Matuson concluded, “Today’s meeting with creditors was meant to provide an overview of the past 10 days, actions taken and to open the lines of communication with extended stakeholders. The extent of stakeholder engagement and complexity of the business has meant that we have requested and been granted an extension for publishing the Business Rescue Plan. We thank creditors for their support and their agreed extension for the Plan. We intend to get the plan published by no later than the end of February 2020, if not before. We will communicate in this regard”.

ENDS


About Business Rescue

Business Rescue involves proceedings to facilitate the rehabilitation of a company that is financially distressed by providing for:
 A temporary supervision of the company, and of the management of its affairs, business and property; and
 A temporary moratorium on the rights of claimants against the company or in respect of property in its possession.
About Alvarez and Marsal LLP
Founded in 1983, Alvarez and Marsal LLP is a global restructuring company intent on seamlessly linking operations, performance improvement and value creation to best help companies turn areas of stagnation into growth to achieve sustainable results. The company has advised on the wind up of Lehman Brothers and has extensive experience in the restructuring of airline carriers and aircraft manufacturing and services.
About Siviwe Dongwana
Siviwe is a co-founder and director of Adamantem, a professional services firm specialising in Accounting, Corporate Advisory and Business Improvements & Turnaround services. Siviwe is a qualified chartered accountant with experience in Auditing, Corporate Finance, Risk Management, Corporate Governance and Financial Advisory across a wide range of industries. Before co-founding Adamantem Siviwe was a partner at Deloittes .
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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by Darren »

Good news for SAA, means there won't at least be an immediate liquidation.

Appointing Siviwe Dongwana of Adamantem as joint BRP was arguably unnecessary from a pure business rescue perspective and likely done for political reasons, but given how intensely political this process is inevitably going to be that might yet prove to have been wise. Dongwana also brings a lot of experience of government, which is important, though he has a chequered past.
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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by Bearcat »

Darren wrote: Sat Dec 21, 2019 10:52 am Good news for SAA, means there won't at least be an immediate liquidation.

Appointing Siviwe Dongwana of Adamantem as joint BRP was arguably unnecessary from a pure business rescue perspective and likely done for political reasons, but given how intensely political this process is inevitably going to be that might yet prove to have been wise. Dongwana also brings a lot of experience of government, which is important, though he has a chequered past.
The thing with an additional BRP is the cost.
Typically BRP's get paid eye watering amounts ... and now that cost has doubled
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Re: Solidarity (and now the Government) to put SAA into Business rescue

Unread post by Darren »

Yes, unless Matuson has accepted a reduction in fees which seems unlikely. Though if Dongwane brings with him even a small additional chance of convincing the unions & government to fall in line the cost will have been worth it in my opinion.

It’s not that unusual to see joint BRPs for massive corporate rescues, and in any case the fees paid to consulting firms and other specialists are likely to dwarf by a huge margin anything earned by Matuson & Dongwane directly. The cash flow analysis alone that was just done by PWC would not have been cheap.

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