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BL Premium reports that South African Airways (SAA) will get R2bn in cash from the Treasury and another R2bn loan guarantee to raise finance from commercial banks to facilitate its business rescue process.
This was announced by public enterprises minister Pravin Gordhan on Thursday morning. The airline, which has been placed in business rescue by its board of directors, had been unable to raise finance from either the Treasury or lenders to continue operating. The funding will enable the company to continue operating while it is being restructured. “It must be clear that this is not a bailout. This is the provision of financial assistance in order to facilitate a radical restructure of the airline,” Gordhan indicated. The R2bn in cash would be provided in a “fiscally neutral way”, which means that the government will need to raise the money, for instance, from the sale of state assets. The R2bn bank loan will be repaid by the Treasury from future budget appropriations. The government has also given lenders a commitment that the existing debt of R9.2bn and interest will be fully repaid and will not be affected by business rescue.
- Read the full original of the report in the above regard by Carol Paton at BusinessLive (paywall access only)
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