Sun, 29 Nov 2020

The return date for SA Express has been extended until 28 January 2021 in order to provide for more time to try to save the airline.

SA Express was placed under provisional liquidation on 29 April 2020 after its business rescue process failed.

According to Gareth Cremen of Cox Yeats attorneys, who represents the joint provisional liquidators of the state-owned regional airline, the postponement is to give interested parties more time to conclude their proposed deals for the disposal of the airline.

"If you put SA Express in final liquidation, the airline would lose all the rights it has regarding licences, for example. We are waiting for proof of funding on the offer that has been made and we are busy drawing up sale agreements, so the process is moving along," said Cremen.

An equity crowdsourcing proposal by a group called Fly SAX, backed by some employees, has been selected as the preferred bid. This came after the airline's provisional liquidators concluded their process of due diligence on the 17 expressions of interest in the group.

The purchase price for the Fly SAX bid is R50 million, payable in the form of a bank guarantee to be provided to the joint liquidators. The plan would be to start off operations with just four aircraft.

The idea is to offer an investment opportunity in SA Express to retail investors through a public offering. Uprise Africa, an "equity crowdfunding" platform that allows investors from around the world to invest capital into South African businesses in exchange for equity shares, is facilitating the process. The CEO of Uprise Africa is Tabassum Qadir, the former co-chair of grounded low-cost SA airline Skywise.

The retail investors will not be subscribing for shares directly in Fly SAX, which is a private company and is not permitted by law to offer its shares to the public. The Uprise Africa Fund is an unlisted public company and will subscribe for shares in Fly SAX by means of the funding raised in this offering. The Uprise Africa Fund will in turn issue shares in itself to investors, and these shares will be economically linked to SA Express.

Furthermore, Fly SAX has indicated that it does not require any of the movable assets of the airline - which would include aircraft. All the movable assets will, therefore, be sold on a public auction and the proceeds applied to the purchase price.

Government gave SA Express more than R1.2 billion in urgent financial support for the 2019/2020 financial year. The DPE, meanwhile, has in the past acknowledged that mismanagement took place at the airline.

Zondo Commission

At the beginning of October North West premier Professor Job Mokgoro testified at the Zondo Commission into state capture that a decision to pay R50 million to SA Express by the government of the North West province was made by the "decision makers" as a priority project and he was just the "postman" in the process. Mokgoro, who made his first appearance at the commission on Thursday, signed off on the payment in March 2015 when he was the acting director-general in the office of the premier.

The money came from a fund of R132 million at the office of the premier, to which all provincial departments were asked to contribute from their own budgets. The money was ringfenced for projects including those relating to enhanced safety and food security.

The SA Express proposal would cost the North West provincial government R110 million to subsidise flights for the first year alone in what was supposed to be a five-year contract. The second highest bid would have cost the provincial government only R4.7 million.

The only reason given for choosing SA Express, contained in a report from the provincial department of community safety and transport management, was because it is a state-owned enterprise (SOE) and not profit driven.

Source: News24

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