SA Express investor fails to meet bank guarantee deadline

But prospective new owner Fly-SAX says the bank guarantee was secured within the deadline.
The entity hoping to save the airline is confident based on its ‘previous track record’ and its focus on transformation and job creation. Image: Tod Burns

SA Express’s anchor investor was supposed to provide the balance of the R50 million purchase price of the airline last week, but this has failed to materialise, according to the airline’s liquidator Aviwe Ndyamara.

The investor’s failure to meet the deadline to provide the bank guarantee means the airline faces final liquidation.

Read:
SA Express faces final liquidation
SA Express could go into final liquidation if balance of purchase price not secured

Ndyamara told Moneyweb that the required proof of funding from the anchor investor has not been received.

Instead, what was received by the Thursday deadline were some “unsigned [Microsoft] Word documents”.

“I do not recognise that document as a bank guarantee and we have not received the bank guarantee,” he said.

SA Express, which has been under provisional liquidation since April last year, is set to be owned by worker-owned entity Fly-SAX after the entity was chosen as the preferred bidder in October.

Despite the unambiguous statement by the liquidator, Fly-SAX is still confident it can get the airline off the ground.

It contends that the unnamed anchor investor has provided the R26 million required to finalise the sale of the state-owned airline.

‘Bridging’ finance request

In a statement, Fly-SAX spokesperson Thabsile Sikakane said the entity has requested that the provisional liquidator raise the required working capital by using “the provided bank guarantee as [an] underwritten bank guarantee to bridge the third source of funding [crowdfunding] for working capital”.

“This is only possible if the shares of SA Express are transferred to Fly-SAX,” she said. “This process would enable us to meet the requirements which are set as conditions to be eligible to be listed on [the] Uprise Africa Equity Crowdfunding Platform.”

Read: SA Express crowdfunding bid put on ice

The entity has already secured roughly R24 million from a sale of assets that were auctioned off last year.

‘Confident’

Despite the long-drawn-out process of attempting to keep the airline from going under, Sikakane believes it remains viable.

“The possibility of the business enterprise being positioned to resume operations will result in the avoidance of a liquidation and thereby a loss of all jobs and to get better returns to the body of creditors than would arise under the alternative of liquidation,” she said.

“We are confident the outcome of this request will favour us, not only based on our previous track record but also our clear focus on transformation and creation of sustainable jobs.”

Debt-laden underperformer

SA Express has been a serial underperformer over the past few years, and has failed to pay employee salaries since March last year.

The airline was placed under provisional liquidation in April 2020 after rescue practitioners were unable to secure post-commencement finance for the entity to continue operating. In January, its provisional liquidation was extended to April 29 to allow for the conclusion of the new shareholding agreement between the government and the liquidator.

Mismanagement, high operating costs, increasing fuel prices and low demand brought the airline to this point.

The airline implemented austerity measures in 2016 in an attempt to contain the rise in operating costs. However, this did not save it from incurring high levels of debt.

At the time the airline entered business rescue, it had incurred debt of R11.3 million.

The airline owes its creditors a total of R980 million.

This excludes the R150 million owed to the SA Revenue Service and R183 million owed to workers – comprising R81 million in severance packages, R43 million in leave pay and R59 million in outstanding salaries.

Read: SA Express liquidators are looking for the missing millions

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After being run into the ground, literally, the corrupt ANC think that these SOEs are just easily ressurectable.

This is what you get when you have NO intention of fixing a business on business principles but on socialist / communist / unionist job saving mumbo jumbo.

Just more time and money wasted. Guess this is the face of transformation.

TSK!!!

RED, Radical Economic Destruction.

Or RET = Radical economic termination.

Now this must surely smack of opportunism of the highest order. The provisional liquidators MUST raise the bridging finance (yeah right, like its their job!) and then to transfer the shares to Fly-SAX in order to go and raise capital.

Fly-SAX spokesperson Thabsile Sikakane said the entity has requested that the provisional liquidator raise the required working capital by using “the provided bank guarantee as [an] underwritten bank guarantee to bridge the third source of funding [crowdfunding] for working capital”.

“This is only possible if the shares of SA Express are transferred to Fly-SAX,” she said. “This process would enable us to meet the requirements which are set as conditions to be eligible to be listed on [the] Uprise Africa Equity Crowdfunding Platform.”

Huh – how do they expect the liquidators to release the shares to a consortium that has no Proof of Funding except an MS Word document.
Hilarious as to how they think…………

Hey Moneyweb. Any reason my comments have been censored in contravention of our Constitution???
Asking for a friend.

Just based on the fact that a worthless, unsigned Word document was supplied, already means that the people trying to buy SA Express is woefully inept, knows nothing about business, will not be able to run a business, has no hope of rescuing this failed business and should never, ever have been allowed a seat at any negotiating table. They should have been chased away, like the bunch of inept amateurs they are. Why, then, would the liquidator have given them the time of day? Why extend the mercy killing that should have happened a long time ago already? Is it really that impossible for us to just once, do the right thing right, instead of choosing to mess up again?

Hi Batman, I seem to remember from previous reporting that the crowdfunding is meant to come from a massive church headquartered in KwaZulu/Natal with literally millions of members. Found that rather unusual at the time it was reported by Moneyweb, but being Africa with its particular flair for some churches sometimes raking in the dollars, it did make some sense.
Yes, just HOW do liquidators – if they’re professionally and legitimately qualified – entertain a bidder who has no clue what a bank guarantee is! Anyone perhaps know who the liquidators are? And why are they called “provisional” liquidators?

Will this saga please end. SAA and SA Express are bankrupt…finish and klaar! Please stop flogging a dead horse which the taxpayers have to bury. Please stop throwing taxpayers good money after bad. Please act like sensible, reasonable civilized people and accept – there is no money! There is no money tree! The fiscus is bankrupt. South Africa’s economy is hanging by a thread. There is no more to rob, steal and plunder. The End.

FlySAX made a huge strategic and tactical error by collaborating with Uprise Africa the fake crowd fund ran by previous owners(Pakistani foreign nationals) of defunct Skywise that left a debt of R300Miil.SAX is now going into liquidation as a result. FlySAX team is a bunch of amateurs and were taken advantage of….finish n klaar!

End of comments.

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