Gordhan’s exit sparks hope for Mango’s sale – BRP

Sipho Sono, the business rescue practitioner (BRP) in charge of executing low-cost state airline Mango’s business rescue plan, is hopeful that with Public Enterprises Minister Pravin Gordhan’s departure from politics, which was announced last week, his strange resistance to the sale of Mango will also vanish.

Mango is a subsidiary of South African Airways (SAA), which is involved in a controversial sale agreement with the Takatso Consortium for 51% of its shares.

ALSO READ: Mango sale to forge head despite Gordhan’s efforts

Sono says there is no logic to Gordhan’s fight against the sale, since both SAA and Takatso have indicated that they are not interested in operating a low-cost airline.

“A new minister may have a different view and look at things objectively,” he says.

Not quite apathy …

Gordhan has for an extended period of time failed to take a decision on the sale, which has had a paralysing effect on the business rescue process and efforts to revive jobs, since his approval as shareholder representative is a legal requirement for the sale to proceed.

Sono says Gordhan has not given any substantive reason for his opposition to the sale.

ALSO READ: Judge rules on sale of Mango; calls Gordhan’s actions irrational

If Gordhan had rejected the request, his decision could have been taken on review, but by simply refraining from taking any decision, he deprived the business recue practitioner of that legal strategy.

In the end, Sono did go to court and in September last year the Gauteng division of the High Court ruled that Gordhan’s failure to take a decision was unlawful and unless he took a decision within 30 days, Sono was entitled to proceed with the transaction.

That was, however, not the end of the matter.

Legal action, and buyer must wait

After being denied leave to appeal, Gordhan filed a late petition to the Supreme Court of Appeal (SCA) to be heard on the matter, and on 14 February lodged an urgent application in the high court to stop Sono from proceeding with the sale until the proceedings in the SCA have been finalised.

The parties have now agreed that the urgent application to stop the sale will be heard in the week of 2 April, and if the SCA has ruled whether it will condone Gordhan’s late filing of the petition, that decision will also be put before the high court.

ALSO READ: Gordhan will not be ‘bullied’ into rushing sale of Mango

In the meantime, Sono gave an undertaking not to sign a final agreement with the identified buyer, Ubuntu Air Services, for the sale of Mango before 5 April.

According to reports, Ubuntu Air Services is a partnership between South African tour operator AfricaStay, a specialist in Indian Ocean holidays, and DG Capital.

Mango

Mango has not been flying since it entered business rescue in mid-2021.

The airline nevertheless has considerable value, says Sono.

This lies in:

• The Mango brand;
• A customer base that is likely to return when it takes to the sky again;
• A considerable number of passengers who will return to redeem vouchers for flights they booked when the airline was still flying and may lay the ground for the future customer base;
• Its domestic licence, which will enable a newcomer in the domestic airline market to skip the queue of new applicants and thereby expedite its market entrance; and
• Mango’s proven IT and other systems.

The sale is central to the business rescue plan adopted by creditors in December 2021. If it fails, the alternative will be to wind down the business.

Almost a done deal

Sono does not believe the undertaking to refrain from signing the agreement with Ubuntu before 5 April will hamper the transaction further.

He says the agreement is 90% drafted, SAA has reviewed it and given comments, and all that is left is some “fine-tuning”.

“We are proceeding with the work,” he says and hopes to have the deal in the bag by early April.

ALSO READ: ‘He’s made a mess of SAA sale’ – Ramaphosa urged to fire Gordhan over Takatso deal

He says the business rescue plan could have been implemented a long time ago, but for Gordhan’s resistance.

“Mango would have been flying and would have been in private hands.”

That would also have meant the revival of posts for staff.

Employees

Mango employees who were sent home during the business rescue process will be the first in line for jobs when it is revived.

This has prompted the National Union of Metalworkers (Numsa) to support Sono in court in his battle to proceed with the airline’s sale.

Numsa spokesperson Phakamile Hlubi-Majola told Moneyweb Gordhan’s resistance to the sale is “outrageous” and asked what the reason could be.

“The purpose of the sale is that Mango will no longer be a burden on the state,” she said.

“The business rescue practitioner has found a buyer, but the minister is sabotaging the process.”

This article was republished from Moneyweb. Read the original here