SAA borrows R1.5bn

2013-05-06 09:11

SA Airways (SAA) has postponed its bond issue in favour of borrowing R1.5 billion from two banks.

Chief financial officer Wolf Meyer told Business Day this was until Cabinet adopted the airline’s turnaround plans.

The R1.5 billion was working capital to keep operations running while SAA grappled with high fuel prices and its lossmaking, long-haul business in a highly competitive market.

SAA had used a R5 billion state guarantee extended to it last year to secure the loan.

“All the legal documents (for the loans) are being finalised and we are waiting for the minister’s final approval,” Meyer told the newspaper.

Meyer said SAA had also received a “good rate” on the loans because of the guarantee.

The loans were believed to have been extended by Rand Merchant Bank and Investec, the newspaper reported.

However, Meyer refused to confirm this and told Business Day only that the loan was split “50-50” between two local banks.

“We require it (the loans) for working capital ... This was always our plan to use part of the guarantee to raise money,” he was quoted as saying.

SAA would repay the loan once it had gone ahead with its bond issue.

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