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Public enterprises minister Pravin Gordhan says the process followed by his department that saw the Takatso consortium acquire a majority stake in SAA was “fair and transparent”.
Takatso, a special purpose vehicle established to acquire a 51% shareholding in SAA, is majority owned by Harith General Partners, with its minority shareholders being Syranix and Global Aviation. The consortium acquired a majority stake in SAA in May 2022 for a reported R51, a little more than a year after it exited a business rescue process that began in December 2019.
At the time Takatso agreed to invest more than R3bn in working capital in SAA over three years to get it flying again, but said it would not be accountable for its historical debt.
While finance minister Enoch Godongwana allocated R1bn to SAA in his February budget speech, the amount is not enough to settle the legacy debt estimated to be R3.5bn.
The R3.5bn debt stems mainly from the receivership process SAA underwent on its exit of the business rescue process.
However, the department of public enterprises said in a statement on Friday that the outstanding amount will be provided by the government.
“The selection of the strategic equity partner aimed to bolster SAA’s competitiveness in a cut-throat market, ensure its commercial viability and sustainability, and contribute positively to the country’s economy instead of burdening the fiscus,” it said.
The department “is confident in Takatso’s shareholders’ track record and profile, which includes building a diverse portfolio of assets across the continent. Suggestions that Takatso will not be able to raise the necessary capital to grow SAA are unfounded, as Harith has already raised funds from a diversified investor base and obtained internal approvals for their equity contribution.”
Competition review
However, as it stands, the Takatso-SAA deal has still not been finalised and the competition authorities are still reviewing the transaction, which some have criticised for its lack of transparency.
Suspended public enterprises director-general Kgathatso Tlhakudi has accused Gordhan of acting irregularly in the process, while both the DA and the EFF have called for an official inquiry into the deal.
However, the department has defended its due diligence on the parties involved in the SAA-Takatso deal, saying they demonstrated the requisite financial, empowerment, technical and governance credentials. It also dismissed suggestions that Takatso might not be able to raise the necessary capital to support SAA’s growth as “unfounded”.
“Takatso’s financial partner, Harith, has a history of raising funds from a diversified investor base,” the department said. “To our knowledge, Takatso has already secured internal approvals for their equity contribution in this endeavour.”
Harith, established in 2007, is a pan-African infrastructure investor and developer which manages more than $1bn in assets. It has invested in the Beitbridge border post as well as Africa’s largest wind energy farm in Lake Turkana in Kenya and the Lanseria International Airport in Johannesburg. The other Takatso consortium members — Global Aviation and Syranix — operate Lift, a newly formed airline that began operating in December 2020.
The department also defended the deal’s valuation of SAA, saying it was carried out by independent third-party valuation firms that were granted access to the airline’s financials and asset registers. It said these firms had no prior affiliation with Takatso and operated independently of both the consortium and the department.
“Valuations represent a company’s worth at a specific moment, reflecting the information and market conditions at that time,” it said.
It is not unusual for distressed companies, particularly those struggling under enormous debt loads, to change hands for seemingly low nominal amounts. In 1997, Shoprite famously bought OK Bazaars from SAB for a token sum of R1 after the loss-making retailer, which was on the verge of insolvency at the time, had drained more than R1bn in capital from the brewer over the preceding three years.
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