DA writes to SAA lenders advising them to demand an immediate recall of government guarantees

Issued by Alf Lees MP – DA Member of the Standing Committee on Public Accounts
24 Jul 2020 in News

Today, the South African Airways (SAA) creditors once again kicked the SAA can down the road for the umpteenth time. I have written to the commercial banks who comprise the lenders secured by government guarantees to demand that they take immediate action to call in the government guarantees and to put an end to the agony for every South African of the SAA disaster.

In their meeting today, the creditors voted in favour of another delay by giving Pravin Gordhan, the Minister of Public Enterprises, more time to meet the simple condition contained in paragraph 42.1 of the SAA Business Rescue Plan.

We can only conclude that Gordhan is battling to get agreement from his reluctant colleague Tito Mboweni, the Minister of Finance.

The DA calls on the creditors to reject the SAA Business Rescue Plan with the contempt it now deserves.

The creditors, particularly the secured creditors, have been led by the nose by the Minister Gordhan, who has simply ignored condition 42.1 of the SAA Business Rescue Plan which requires the Government to provide confirmation that “… the Guarantees issued to them in respect of the Pre-commencement Claims and the PCF (Post Commencement Finance) provided by them to the Company (SAA) shall continue in full force and effect until the Lender Claims are discharged in full as contemplated in this Business Rescue Plan.”

Ministers Gordhan and Mboweni have displayed an incredible degree of contempt by publicly stating that they support the SAA Business Rescue Plan and then simply ignoring their own obligation contained in paragraph 42.1 of the Plan, a vital aspect of the Plan!

Given the bankruptcy of SAA and its complete inability either now or in the future to repay the R16,4 billion which is secured by way of government guarantees, it beggars belief as to why creditors who hold the government guarantees have failed to simply call in these guarantees and recover their money.

By not doing so they are prolonging the agony for poor South Africans as more and more bailout money is poured by the ANC government into their “flag carrier” vanity airline project.

There is absolutely no national interest that can justify the continued and immoral funding of the SAA albatross that hangs around the necks of already overburdened South African taxpayers.

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