Business 18.6.2017 06:07 pm

SAA has possibly defaulted on billions in loans – DA

The official opposition says it will ask Finance Minister Malusi Gigaba to urgently account for the national airline’s alleged defaults on loans.

Reports on Sunday that Standard Chartered Bank has declined to renew their loan facilities to South African Airways (SAA) and that repayment of these loans has been demanded may only be the tip of the iceberg and government might be forced to foot the bill, the Democratic Alliance said.

“According to a repayment schedule, SAA has listed R8.887 billion repayable in 2017/18, yet some of the maturity dates have in fact passed,” DA spokesman Alf Lees said on Sunday.

Key dates that had already passed included:
R0.3 billion due to Standard Bank on December 30, 2016;
R1 billion owed to Standard Bank on December 30, 2016;
R1 billion owed to Standard Chartered on January 27, 2017;
R1 billion owed to ABSA on December 8, 2016;
R1 billion owed to Standard Chartered on December 22, 2016;
R2.25 billion owed to Various Phoenix on April 28, 2017; and
R0.8 billion owed to Various GBF on April 28, 2017.

Lees said he would ask Finance Minister Malusi Gigaba to urgently answer two vital questions. The first was whether or not the other loans already overdue had been repaid and/or rolled over? The second was how close SAA was to default resulting in lenders calling in government guarantees?

“All of SAA’s loans are backed by government guarantees that in total now amount to R19.1 billion. If SAA has failed to repay some of these loans it could force other creditors to recall their loans, which would then necessitate the government to step in and pay. This money would ultimately be taken from the public purse and could have dire consequences for the sovereign rating status of South Africa,” he said.

“The fact is that the only way out of this mess is for SAA to apply for business rescue where robust cost reductions can be implemented.

“A successful business rescue and the prevention of the government guarantees being called in would have to lead to a full, or at very least a majority privatisation, of SAA in order for SAA to survive in the long-term and importantly, to release the South African taxpayer from ever having to meet the R19.1 billion government guarantees,” Lees said.
– African News Agency (ANA)

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