SA Express could go into final liquidation if balance of purchase price not
Should SA Express not raise the balance of the purchase price of the airline within the next three months, the airline will go into final liquidation, according to the provisional liquidator, Aviwe Ndyamara.
SA Express, which has been under provisional liquidation since April last year, is set to be owned by worker-owned entity, Fly SAX after the entity was chosen as the preferred bidder in October.
The airline’s provisional liquidation was extended to April 29 in January to allow for the conclusion of the shareholding agreement between the provisional liquidator and the government.
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The purchase price for SA Express is set at R50 million (R63 million less than what the provisional liquidators had initially valued the airline at) which is payable by a bank guarantee.
Roughly R24 million was raised following the auctioning of the airline’s assets in November last year, leaving an outstanding balance of R26 million. Fly SAX has yet to provide a bank guarantee, which keeps the airline at risk of final liquidation.
The new proposed ownership structure of SA Express, according to the bid proposal submitted by Fly SAX, will see 25% of the airline owned by the worker-owned entity, 27% by the government or a strategic equity partner and 48% by investors from a crowdfunding platform and an anchor investor.
Read: SA Express workers secure two anchor investors
SA Express has been a serial underperformer for a number of years, with its revenue steadily declining due to aircraft underutilisation and mismanagement. In February 2020, it had a debt burden of R11.3 million. After failing to secure post-commencement financing it was placed under business rescue, before being placed under provisional liquidation.
SA Express owes its creditors a total of R980 million. This excludes the R150 million owed to the SA Revenue Service and R183 million owed to workers – comprising R81 million in severance packages, R43 million in leave pay and R59 million in outstanding salaries.
More than 691 employees have been affected by SA Express’ provisional liquidation, and their contracts have been suspended since April 2020. These employees have approached the South African Human Rights Commission for mediation.
Employees enjoy a special preference in terms of insolvency law, but are paid only after creditors’ claims have been settled.
“At this stage it is unclear if there will be residue for payment of employee claims,” Ndyamara said.
Ndyamara told the National Council of Provinces select committee on finance on Wednesday that the airline has so far managed to sell four out of six of its aircraft to the value of R1.8 million.
Maintenance on the aircraft was poor and the remaining two that were unsold were found without engines, Ndyamara said. The airline has successfully cancelled its aircraft leases to the tune of R2.6 million.
An inquiry into the underutilisation of the aircraft and other issues that led to the decay of the airline is currently underway, Ndyamara said.
If found that SA Express continued to trade under insolvent circumstances or that the previous board presided over dodgy dealings at the airline, the directors could be found guilty of reckless trading under the Companies Act.
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