Creditors of embattled state-owned flag carrier South African Airways will finally have a chance to vote on the business rescue plan proposed for the airline next week.
SAA went into business rescue in December last year following years of losses and repeated state bailouts. The business rescue practitioners published their rescue plan earlier in the week after repeated delays.
The practitioners have informed all affected parties and other holders of a voting interests under the Companies Act that a meeting to vote on the plan "to determine the future of the company" will take place on Thursday, June 25 at 11:00. The meeting will take place over the internet.
Under the terms of the rescue plan published late on Tuesday evening, government will have to raise more than R10 billion to keep the airline from going under.
- getting the airline operational again (R2 billion);
- paying a dividend of 7.5 cents in the rand to concurrent creditors (total of R600 million);
- paying severance packages to employees not being retained (R2.2 billion);
- paying post-business rescue commencement creditors (R800 million);
- paying about R1.7 billion to lessors; and
- paying for unclaimed outstanding tickets (R3 billion).
This R10 billion proposed by the practitioners excludes about R16.4bn in historic government-guaranteed debt already allocated in previous budgets.
Creditors, which include employees, have a right to vote to amend the plan, approve it or reject it. Voting interests are equal to the value of the amount owed to creditors. Local banks, who are owed a total of R16.4 billion secured by government guarantees, form the largest voting block.
In terms of the act, employees are entitled to make a submission before a vote takes place. Government, as shareholder of the airline, is not entitled to vote to approve or reject the proposed plan.
Creditors who for any reason are unable to attend the electronic meeting, are entitled to vote by a proxy form, which must be forwarded to BRPs prior to 17:00 on June 24.
In terms of the Companies Act, a business rescue plan requires 75% approval of the voting interest "present" at the relevant creditors meeting. Furthermore, 50% of the voting interest must be independent.
If the plan is not approved at the first meeting, the act provides for a second creditors meeting to vote on a revised the plan. If the plan is again rejected at the second meeting, the company has to be placed in liquidation.
Both the Department of Public Enterprises as well as the business rescue practitioners have indicated in the past that they want to avoid liquidation, which would mean, among other things, that SAA loses its operating licences.