Business rescue practitioner appointed for SAA

Les Matuson has been appointed as business rescue practitioner in South African Airways' voluntary business rescue process.

According to his profile on the website of Matuson Associates, he is a business advisor, turnaround specialist and senior business rescue practitioner. The website adds that he has been active in this field for almost 35 years and has supervised recoveries in a number of large, high-profile corporate matters, including Ellerines.

"The firm's focus is on preserving and maximising enterprise value for all stakeholders while dealing with a wide range of complex issues," states the website.

In his role at SAA, Matuson ''will operate as an independent party to oversee the business rescue process as defined by Chapter 6 of the Companies Act 2008. According to the Act, Business rescue aims to facilitate the rehabilitation of the company that is “financially distressed”. The act also determines the legal rights of shareholders and creditors,'' according to a statement released on Friday evening on behalf of Les Matuson.

According to the statement, ''Post commencement funding which is critical to ensure ongoing operations of the company, has been committed to enable the company to continue to deliver services to its customers and stakeholders for the business rescue process.''

Matuson said him and his team will ''immediately begin consultations with all affected persons and stakeholders and intend to communicate more fully in due course”.

''Our first legal requirement as per the Companies Act will be to call a general meeting with all stakeholders within 10 day.''

Not very happy

Dirk Hermann of union Solidarity told Fin24 on Thursday afternoon that organised labour was not very happy that a business rescue practitioner had already been appointed for SAA without consulting labour unions.

Minister of Public Enterprises Pravin Gordhan said in a statement sent to media in the early hours of Thursday morning it was envisioned that some existing lenders to SAA would provide R2bn in post (business rescue) commencement finance guaranteed by the state and "repayable out of future budget appropriations in order for the business rescue process to commence and to enable SAA to continue to operate".

Government, through National Treasury, will also provide an additional R2bn of post commencement finance in "a fiscally neutral manner," he said, among other planned processes. The department of public enterprises is the shareholder of SAA.

"SAA and government are well aware that Solidarity has brought an application in terms of the Companies Act to have SAA placed in business rescue. On top of that we have asked government and the airline in a letter to consult with us before 09:00 Friday morning about who will be appointed as business rescue practitioner," Hermann told Fin24.

"But now it is a big concern for us that government just went ahead and appointed a business rescue practitioner. We want to protect the integrity of the process by ensuring that the business rescue practitioner is independent. If he is just appointed to do the agenda of the shareholder of SAA (which is government), then, in our view, the business rescue process will fail."

Solidarity met with the ministers of finance and public enterprises in at the South Gauteng High Court early on Thursday morning and SAA undertook to file a resolution with the Companies and Intellectual Property Commission to have itself placed in voluntary business rescue, which has since taken place.

'Too hasty'

"We feel SAA has acted too hastily and that Minister of Public Enterprises Pravin Gordhan seems to already have set out his own plan for SAA in a statement issued by his department early on Thursday morning," said Hermann.

"Why were the unions not included in the selection process of the business rescue practitioner? We might challenge the appointment and maybe look at the option of a second business rescue practitioner being appointed to work in conjunction with the current one. We cannot allow government just to steamroller (sic) the business rescue process."

Economist Peter Attard Montalto, head of capital markets research at Intellidex, earlier said in a client opinion that in his view, a business rescue practitioner could not legally be "dictated" to by a shareholder, creditor or government.

Montalto interprets Gordhan's statement as seemingly wanting to "impose" a way forward on the business rescue practitioner and, in his view, seems to be "stepping over the line". Montalto anticipates a "political clash" coming in the process of determining the business rescue plan. In his view, the struggling state-owned company will likely still end up being liquidated.

Either way, he foresees SAA being turned into a "radically slimmed down entity".

Explaining the business rescue process, attorney Adriaan Human of DKVG earlier told Fin24 that the creditors of a company - which could include government - play a crucial role in the process of adopting a business rescue plan.

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