'Too good to be true' – DA red-flags R21bn private loan offer to SAA

2018-12-24 21:28
State-owned airline SAA carried 6.9 million passengers in the year ending March 2016.

State-owned airline SAA carried 6.9 million passengers in the year ending March 2016.

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The DA reckons that the R21bn SAA loan may be too good to be true.

On Sunday, City Press reported that a consortium of local and international investors had made an unsolicited loan offer to SAA of R21bn to save the financially crippled parastatal.

On Monday, the DA said it would be writing to Finance Minister Tito Mboweni to urge him to put pressure on his Cabinet colleagues to carefully consider the proposed private loan.

READ: SAA needs R3.5 billion by March, says interim CFO

The party's Alf Lees said that he had noted reports suggesting that the loan is conditional on the consortium being given a 51% equity share in the national carrier.

"The reported offer of the R21bn loan looks attractive on the surface. The condition of the consortium taking a 51% equity share is particularly attractive as it would ensure that the ANC government loses all influence over SAA which would be free to conduct business without political interference that has dogged the airline in the past," Lees added.

READ MORE: Embattled SAA gets unsolicited R21bn offer for 51% stake - report

He said if the loan offer was to be considered, the agreement should not be backed by any government or taxpayer guarantees, and it should be used primarily to extinguish all existing loans to SAA that are backed by guarantees.

"All existing government taxpayer guarantees of R19.1bn must be withdrawn from SAA and no further guarantees must be issued," said Lees.

"The R21bn offer may be too good to be true and, in the end, the only solution will be to put SAA into business rescue."

ALSO READ: South Africans can't keep bailing out a broken airline

The cash-strapped national carrier is reported to have had recent injection of just over R3bn from lenders providing short-term loans, bringing the airline's loans, repayable by the end of March 2019, to a R13bn.

"Unless robust action is taken to put SAA into business rescue or an equity partner with deep pockets is found, the massive taxpayer bailouts of SAA will continue unabated," Lees said.

Read more on:    da  |  saa  |  tito mboweni
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