SA Express has seven interested investors

SA Express’s provisional liquidators say there are seven parties who are interested in investing in or buying the airline.

Aviwe Ndyamara, who is leading the team of the airline’s provisional liquidators, informed Parliament’s Standing Committee on Public Accounts (Scopa) of this on Tuesday.

The liquidators’  appearance before Scopa comes after they failed to appear before Scopa last week when the High Court in Johannesburg extended SA Express’s provisional liquidation by three months to September 9, leaving the members of Parliament fuming.

Read: MPs lash SA Express liquidators

SA Express became the second state-owned company to be placed under business rescue on February 6, after the High Court in Johannesburg made an order in favour of logistics company Ziegler SA, a former SA Express service provider owed R11.3 billion. Zeigler had made an urgent application for the airline to either be placed under rescue or liquidation.

Provisional extension

Attempts to rescue the airline did not get off the ground, with rescue practitioners Daniel Terblanche and Phahlani Mkhombo and the Department of Public Enterprises (DPE) as government’s shareholder representative, not seeing eye-to-eye on the airline’s rescue plan and the provision of post-commencement funding.

This forced Terblanche and Mkhombo to abandon the rescue and approach the court to convert the process into provisional liquidation, the order was granted in April and went unchallenged by the DPE.

On June 9 the provisional liquidation would have been turned into a final liquidation. But the liquidators asked for an extension of their powers and now the final liquidation date has been moved to September 9.

Ndyamara explained to MPs that they approached the courts for an extension, because a final liquidation order would have resulted in SA Express’s licences being suspended and eliminated the prospect of an agreement with potential investors and or buyers.

On Monday the High Court in Pretoria gave an order which allows for the provisional liquidator to sell and transfer the company’s property.

“We are empowered to start the process immediately and we will advise affected parties [about] the process we will be following to procure either equity investment or to proceed with a sales process,” said Ndyamara.

SA Express has two licences which are set to expire on July 31 and December 31. The intention is to complete a sales or investment agreement prior to the expiration of these licences.

Asset value discrepancy

Since the liquidators were appointed in May they have been examining the affairs and transactions of the company ahead of its dissolution.

Ndyamara said at the time the estimated assets of the company were quantified at R1.8 billion, but over the past five weeks they have been able to conduct an evaluation of the assets they were able to reduce it.

Read: Government expected to support restructured SAA until March 2024

Currently, SA Express’s assets are estimated to be valued at R113 million. The correct value of the assets will be important in the negotiations around the sale and investment in the airline.

“There are significant differences,” said Ndyamara.

“We are still doing a reconciliation, but honourable members there is a massive discrepancy between what is known on records and what is physically there on the ground.”

Employees salaries 

Ndyamara also explained that when the company went under provisional liquidation the employee contracts for all 691 workers were “terminated by law”.

As the meeting was underway SA Express workers were outside the Department of Public Enterprises offices in a continuation of their protests over unpaid salaries.

When the liquidators were brought in, workers had not been paid their March salaries. They have since received UIF-Temporary Employer-Employee Relief Scheme payouts for April and May.

Even in the sale of the company, he said it is “unclear” where workers will receive retrenchment packages whose claims will be paid from residual fees from the sale of the company’s assets.

The financial situation at the airline is so dire that the liquidators, who are the last to be paid, have had to use R300 000 of their own money to pay some SA Express workers who were asked to assist them with the valuation of the company’s assets.

“Having not been paid for the past two months it was impractical for them not to be paid for their services that … would assist us in fulfilling our duties,” said Ndyamara.

Who is responsible

In response to questions from MPs on what appears to be the department’s complacent attitude to SA Express’s failure when compared with South African Airways, acting director-general Kgathatso Tlhakudi was made to apologise to Scopa after he said instead of  “pointing fingers” Parliament — as the second line of defence and department as the first — should focus on bolstering its oversight role to avoid a repetition of this scenario.

He said at the heart of SA Express’s failure was a history of corruption and governance failures which MPs “were very much aware of”.

MPs did not take kindly to his comments, which came across as not wanting to take accountability for its role.

We are not going to allow a situation where we are going to be clustered with you,” said Scopa chair Mkhuleko Hlengwa of the IFP, adding that ultimately the buck stops with the department.

Tlhakudi explained that over the past two years the state had put R1.5 billion into the airline which has come to naught.

“That hole has turned out to be much bigger than we anticipated to fill.”

He said when the airline’s rescue process was started there was no window available to appropriate funds from the national budget to SA Express. He said it would have also been irresponsible to request funds for the process because “there has not been a credible plan put before us that would warrant us to those ends”.

“What we are faced with here is an entity that has clearly failed and it’s unfortunate that in the process it has impacted on people whose livelihoods have been impacted, people are walking away with close to nothing,” he said.

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