- The provisional liquidators of SA Express are hitting back at what they claim to be false media statements made by the airline's preferred bidder Fly SAX.
- SAX has been in provisional liquidation for almost two years, since April 2020, after its business rescue process failed.
- Since then, Fly SAX has been trying to get funding, but has been unable to meet the provisional liquidators' requirements.
The provisional liquidators of SA Express (SAX) on Friday accused the preferred bidder for the airline, Fly SAX, of making false statements in the media and of being the real cause of delays in finalising a sale of the state-owned regional airline.
SAX has been in provisional liquidation for almost two years, since April 2020, after its business rescue process failed. Earlier this month, the return date for a liquidation application was again extended, this time to 4 July this year, to see if a suitable deal to sell the airline can take place.
In 2020 the provisional liquidators did due diligence on 17 expressions of interest in SAX and selected as preferred bidder Uprise Aviation - which later became Fly SAX, a consortium of former employees of SAX. At the time, the purchase price for the Fly SAX bid was R50 million, payable in the form of a bank guarantee to be provided to the joint liquidators.
On Thursday, Fly SAX issued a statement in which it accused the provisional liquidators of "frustrating" and delaying plans to rescue the airline. It sent out an urgent call to the provisional liquidators and the airline's shareholder, the Department of Public Enterprises (DPE), to finalise the sale.
"Uprise Aviation/Fly SAX SA has had since September 2020 to come up with funding, and it failed to come up with satisfactory guarantees. The ability for any successful buyer to trade the airline profitably in the future is uncertain especially where there is no fleet or assets," the provisional liquidators said in a statement on Friday afternoon.
"Having been unsuccessful in raising capital and breaching every offer previously made, Fly SAX SA became opportunistic and submitted a new offer, on 9 June 2021, to acquire SAX for a mere R500 000, which offer was not suitable to the liquidators and was not accepted. Fly SAX SA's inability to provide working capital is also somewhat concerning."
According to the provisional liquidators, in November 2021 they received an offer from a consortium that consisted of "Uprise Group in a joint venture with Fly SAX SA, Uprise Aviation, Impact Africa and Labour Unions".
The offeror is no longer Fly SAX SA and the shareholders of Uprise Aviation and Uprise Group are unknown, nor have they been disclosed to the provisional liquidators. Fin24 reported in October 2020 that a crowdfunding platform called Uprise Africa formed part of the equity crowdsourcing proposal by Fly SAX. The CEO of Uprise Africa is Tabassum Qadir, former co-chair of grounded low-cost SA airline Skywise.
"Throughout the process, Uprise/Fly SAX SA introduced a series of attorneys claiming that they hold funds for and on behalf of Fly SAX SA, but could not provide proof of funds held," state the provisional liquidators."
The provisional liquidators would require shareholder and creditor approval for any deal, followed by a compromise with creditors if acceptable, and fulfilling legal duties in terms of recoveries in SAX against various parties.
Chris Hart, executive chair of venture capital firm Global Impact Investments, was tasked by Fly SAX in November 2021 to lead its fundraising efforts and investment efforts based on a more targeted crowdfunding approach. Hart was previously a senior economist at Absa and a global market strategist at Standard Bank. Although Hart is not part of the consortium, he will be assisting the bidders to try and take over SAX and make it commercially viable.
The idea is for SAX to be a niche player and complement existing route networks in the country as a feeder airline. Hart said on Thursday he is concerned that delaying finalising the bid process will prevent SAX from competing with other airlines.
"The delay is blocking progress in securing investment. The process seems to have stalled. We are questioning why there are still delays in finalising the bid process. Fly SAX was chosen as the preferred bidder and has met, in our view, the conditions set out by the provisional liquidator and the shareholder (the Department of Public Enterprises). Therefore, we do not understand why Fly SAX is not being named as the winning bidder so that the purchase of the airline can be finalised," said Hart.
Hart admits that Fly SAX will in essence be buying a "shell" of the airline, but is confident that any licences that have expired and the route network can be revived.
"We have interest from local and international investors, but they want to see the bid process finalised. Some of these investors see the potential of SAX enhancing their mining and hotel operations in the country. We cannot obtain the minimum funding without being announced as the winning bidder," explained Hart.
He added that the crowdfunding component would only come into play later on.
Zazi Nsibanyoni Mugambi, president of the SA Cabin Crew Association (SACCA), which supports the efforts of Fly SAX, believes it would be a dereliction of duty if the provisional liquidators continued to "drag their feet", leading to the final collapse of "an important and valuable national asset".
The recently released first part of the Zondo Commission report found SA Express was affected by state capture. According to the provisional liquidators, they continue to recover and pursue parties who caused the losses suffered by SAX.
The DPE was approached for comment, but declined.
UPDATE: Tabassum Pardesi, CEO of Uprise, responded to the latest developments to say Uprise Aviation and Global Impact Holdings led by Chris Hart reiterate its full support and sympathy to the ex-employees of SA Express.
"We confirm that a full deposit was paid last year when Global Impact Holdings agreed to join the consortium and support the revised bid. We are exploring the grievances of FLY SAX SA team and the counter arguement of the Liquidator and shall respond through the official communication channel in due course," said Pardesi.
According to Hart, Global Impact Holdings is of the very strong opinion that investment to revive the airline will be found.
"This will be in the very best interests of the airline industry, SA Express staff and the SA economy. Global Impact Holdings seeks to make a constructive contribution to the whole liquidation process and the subsequent success of a revived SA Express. We are exploring the grievances of the FLY SAX SA team and the counter argument of the liquidator. We hope that a construction way forward is found soon," he said.
* This article was updated on Friday 28 January at 16:00 with comment from the provisional liquidators and at 9:00 on Saturday 29 January with comment by Pardesi.