‘If they can’t show the money, there’s no deal’ – Gordhan on SAA-Takatso takeover

The secrecy around the sale of the South African Airways (SAA) to Takatso Consortium was yet again under the spotlight in Parliament.

The SAA, alongside Public Enterprises Minister Pravin Gordhan, appeared before the Standing Committee on Public Accounts (Scopa) on Tuesday, to provide an update on the status of the SAA-Takatso deal.

Last week’s meeting was postponed after Gordhan notified Scopa that he was accompanying President Cyril Ramaphosa on a state visit to Kenya.

No money, deal

During Tuesday’s briefing, Gordhan told the committee that the details of the Strategic Equity Partner (SEP) progress cannot be shared because the deal is at a “sensitive stage”, adding that this will be done once finalised.

“The deal is alive and we hope to conclude it sooner than expected,” he said.

ALSO READ: Treasury concerned about SAA deal with Takatso Consortium

Asked if Takatso had the capacity to raise the R3 billion that it committed to, Gordhan said: “If they can’t show the money then there’s no deal and there might be other possibilities that we have to explore. But what we understand now is that, that is not the case”.

The minister said they were confident that the deal would be successful.

He further said that one must also consider the fact that the airline sector is a very competitive environment, but insisted that the deal was not being kept a secret.

“This is a very competitive industry and one wouldn’t mind to have the other for launch,” Gordhan told Scopa.

Takatso board member resigns

Gordhan was also quizzed about Gidon Novick’s resignation as the board member of the Takatso Consortium, which was formed by investor firm Harith General Partners and Global Aviation who own 80% and 20% of the deal respectively.

Novick resigned on Monday, raising concerns on whether his departure could negatively affect the SAA-Takatso deal.

He told News24 that the reasons for his resignation included being left “in the dark” about the progress of the transaction of 51% of SAA shares being sold to Takatso.

Novick also said that Harith was the reason for his departure from Takatso, due to it withholding information to minority shareholders, Business Maverick reported.

RELATED: Being ‘in the dark’ prompts Takatso Consortium CEO to resign

But Gordhan told Scopa on Tuesay, that Novick’s resignation should not be taken seriously.

“Mr Novick was a small and relatively minor partner in that consortium. Let’s not overplay what he has to say. I mean whatever happens within Takatso is their business,” he said.

“Just because he happens to be somebody with experience somewhere in his past, as all of us do, doesn’t discredit everybody else, nor does it mean that what he puts on the table is something that one must take seriously.”

According to the minister, Novick only resigned from the Takatso board not as a partner.

“It’s like having your cake and wanting to eat it too,” Gordhan said.

Global Airways is invested in domestic airline Lift, which was co-founded by Novick.

Business rescue

Government’s plans to sell a stake in SAA to Takatso was announced after the airline was forced into business rescue in December 2019.

With the airline having exited the business rescue process in April last year, Takatso is expected to pump R3 billion in working capital to the “new” SAA over the next two years.

The deal between the Department of Public Enterprises (DPE) and Takatso will see the consortium acquire 51% of SAA for a meagre R51.

LISTEN – Carte Blanche Podcast: Digging into the SAA, Takatso deal

Gordhan previously told Scopa in May, that the deal depends on government providing R3.5 billion required to complete SAA’s business rescue plan rollout.

SAA was only allocated R10.5 billion in the 2020/21 financial year rather than the R14 billion as requested by the DPE.

Last month, Finance Minister Enoch Godongwana did not provide any funding for SAA during his Medium-Term Budget Policy Statement (MTBPS).

Financials

Meanwhile, SAA’s board has noted the auditor-general’s findings in the 2017/2018 audit report.

In the 2017/2018 financial year, SAA suffered a loss, totaling to R5.4 billion and in order to address the weakness highlighted in the auditor-general’s report, SAA is expected to implemented a corrective action plan to deal with the weakness.

This is according to he presentation made to Scopa on Tuesday.

See below:

SAA had come under fire for failing to submit financial statements from 2017 to 2022 financial years, which in turn made it difficult for Scopa to conduct oversight over the airline.

READ MORE: What to expect from the ‘new SAA’

While an audit report into the 2017/2018 financial statement was concluded with a qualified audit opinion, the financials for the years ending 2018/2019, 2019/2020, 2020/2021 and 2021/2022 are currently being audited.

The outstanding audits will be concluded in the last quarter of the current financial year, which ends in March 2023.

Additional reporting by Nica Richards and Moneyweb