SAA sale officially off after disagreement over airline’s value:

Marred by controversy, the government’s deal to sell its majority shareholding in SAA to the Takatso Consortium is officially off.

Public Enterprises Minister Pravin Gordhan made the announcement during a media briefing in Cape Town late on Wednesday afternoon. Earlier that morning, the department briefed the cabinet on the decision, which will see the national carrier continue to be 100% state owned.

According to Gordhan, the sale and purchase agreement between the government and Takatso contained a clause allowing for the transaction to be terminated by mutual consent. “That clause was put into action and both parties have agreed, after we inquired about the status of the negotiations, that there was no clear path forward as far as the transaction with Takatso is concerned,” he said.

The SAA deal — which was first announced by Gordhan in June 2021 — has been the subject of fierce wrangling over the years, spurring on calls for the minister’s resignation.

In December 2019, the national carrier became the first state-owned entity to be placed under business rescue, following nearly a decade of financial losses. After it exited the  business rescue in April 2021, Takatso was chosen as a strategic equity partner to re-launch the restructured airline. 

The decision to call the deal off was made after the department of public enterprises and Takatso could not agree on the structure of the transaction, which had to be renegotiated in the wake of decidedly different market conditions three years after the deal was initially struck.

In a statement, the department noted that it undertook two valuations of the airline. 

The first — which was undertaken when the economy was still in the throes of the Covid-19 pandemic — took place when the airline was not flying and its properties were valued at R2.4 billion. The business was valued at between 0 and negative, according to the department.

“However, in the last three years it became clear that the market conditions have changed, the economy had improved, the demand for flying had increased formidably and this required that a new valuation be done,” the statement noted.

According to the department, the second property valuation came out at R5.5 billion, a net increase of R3.1 billion, and the business valuation at R1 billion.

“It became clear in the negotiations that the revised transaction structure must take into

account public interest and fair market price. However, these requirements were not met in the renegotiations,” it said.

The decision leaves SAA’s board and the management to devise the airline’s new corporate plan, which will see the airline introducing new routes and leasing more aircraft, according to the department.

“As a consequence we announced today that the engagement with Takatso has ended, and that there will be further steps taken both by this 6th administration and the 7th administration, to stabilise SAA,” the statement notes. 

Last week the department confirmed that Gordhan intends to bow out of politics after a new administration is elected.

“There were lots of lessons to be learned both during the business rescue and in the process of these negotiations. SAA now enters a new chapter of its life,” the statement concludes.

– The Mail & Guardian

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– The Mail & Guardian

The BBCBE invites you to the inaugural Built Environment Indaba :

It’s a platform for practitioners in the built industry to come together to discuss and provide solutions to the challenges the industry faces

Danny Masimene, BBCBE President, writes: 

The Black Business Council in the Built Environment (BBCBE) is a non-racial, non-political organisation and is committed to the unity of contractors, manufacturers, suppliers and professionals as well as other business formation partnerships with government, labour, communities, non-governmental organisations and other progressive organisations in the built environment. BBCBE is a founder and affiliate of the BBC.

BBCBE in partnership with CETA, CIDB, DBSA, SANRAL and other strategic supporters presents the inaugural Built Environment Indaba that will be taking place on 4 and 5 April 2024 at Gallagher Convention Centre. The theme of the Indaba is “Building a transformed built environment through collaboration, procurement and skills development”. 

This event will provide a platform to all practitioners in the built industry to come together under one roof to discuss and provide solutions to the challenges that are faced by the built environment industry with champions and clear timelines.

BBCBE will monitor the implementations of resolutions taken at the indaba through facilitation and convening of the quarterly work stream sessions, resolutions achieved in progress and those not achieved will be presented to the indaba in the following year for progress and monitoring.

The Built Environment Indaba shall further promote, develop and ensure that there is economic transformation and empowerment at all levels of the economy, ensure the participation of women, youth and people living with disabilities has significant capacity and the requisite skills base for effective participation in the economy, to influence the implementation of appropriate legislation in order to create an enabling environment for the industry to have meaningful transformation across the sector, including manufacturing and material supply across the value chain.

The indaba further aims to expand and reach out to our impoverished communities that don’t have realistic basic needs like clean water, sanitation, electricity and reliable public transport as well as finding solutions to develop scarce skills, creating employment, economic opportunities and providing sustainable solutions to address our ageing and incapacitated infrastructure.

The Inaugural Built Environment Indaba will take place on 4 and 5 April 2024 at Gallagher Convention Centre. If you have not registered, please register now at bbcbeindaba.co.za

– The Mail & Guardian

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