South African Airways has secured offers from a financial institution to provide the additional critical funding necessary to bridge the period until its business rescue plan is adopted.
The beleaguered flag-carrier says its business rescue practitioners have held “fruitful” discussions with the Development Bank of Southern Africa, based at Midrand near Johannesburg.
SAA has already obtained initial post-commmencement funding of R2 billion ($137 million) from commercial banks and the DBSA is offering to provide the next tranche to bring the total to R3.5 billion, with an immediate draw-down of R2 billion.
This balance of the post-commencement funding is needed to meet short-term liquidity demands while the business rescue plan is drawn up, published and adopted. The plan, being developed by the practitioners, is a legal requirement of the business rescue scheme.
“Funding for the restructuring phase after the plan is adopted is being considered by potential funders,” says the airline. “Stakeholders of [SAA] should now have comfort that the rescue process is on a significantly sounder footing.”
It says that the financial agreement means passengers and travel organisations should be confident in booking flights on the Star Alliance carrier.
“Restructuring of SAA will provide an opportunity to develop a sustainable, competitive and efficient airline with a strategic equity partner remaining the objective of government through this exercise,” it adds.