Parliament – MPs heard on Friday from South African Airways’s business rescue practitioners that a lack of funding severely hampered their work, while Public Enterprises Minister Pravin Gordhan questioned their spending decisions and their future objectives for the stricken national carrier.
Siviwe Dongwana, the second member of the business rescue team, stressed that it was essential when trying to restructure a distressed business, to have a clear commitment of funding and to receive the money within an agreed time frame.
“It helps when you have the right amount of post-commencement finance and it helps a great deal if you are able to receive the money timeously,” Dongwana told Parliament’s portfolio committee on public enterprises.
“Without cash, it becomes an exercise in liquidation.”
Dongwana stressed that the business rescue team had done as much cost consolidation as possible, but that creditors’ insistence on cash or advance payment for services placed a severe strain on the liquidity of the operation.
He said the deadline the team faced in terms of submitting a business rescue plan to the government as the shareholder became impossible to meet as the Covid-19 pandemic struck and South Africa went into lockdown, and the company’s aircraft were effectively grounded.
The business rescue operation had faced an extended deadline of the end of March, but requested an extension on 26 March as the landscape changed dramatically, he said.
The difficulties of the business rescue exercise were compounded when the government signalled on April 10 that it would not accede to a request, filed eight days earlier, for more funding.
Gordhan replied that the tussle over funding and a viable restructuring plan, and which should come first, could be likened to a “chicken and egg” debate.
However, he said, in this case, the answer was not obscure as usual.
“The answer is simple – clearly if money is to be spent, it must be spent in terms of the requirements of what a plan provides for,” the minister said.
He insisted that, at present, the government was still waiting for a comprehensive plan setting out a vision of reviving the airline as a viable entity not reliant on public handouts.
“It is not a question of supporting the plan. We don’t have a plan, what we have is one version of the plan,” he said.
Gordhan said winding down the airline was not an alternative, and was not set out in the directives given to the business rescue practitioners.
He also said the team was given the R5.5 billion to complete a business rescue process to resuscitate the airline.
Only at that point could the state agree to release further funding, because it was clear how much this would entail and how it would be spent.
Gordhan went as far as accusing Dongwana and his partners of petulance and possibly mala fides.
“It is petulant for the practitioners to say ‘you won’t give us, so we’ll wind it down’,” he said.
The minister said the threat of liquidation, posed the question of who this would benefit and how SAA’s assets would be disposed of, bearing in mind that they were in fact state property.
“Who is waiting in the wings to pick up what pieces at what price?” he asked.
African News Agency (ANA)
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