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South African Airways puts $1 billion debt restructuring on hold

NEWS
By Reuters | Jul 17th 2016 | 2 min read
By Reuters | July 17th 2016
NEWS

JOHANNESBURG: South African Airways (SAA) said on Sunday it had put on hold a deal to restructure 15 billion rand ($1 billion) of debt after questions were raised about the awarding of the work.

Local media reported this month that the board of SAA went against the advice of its own treasury by agreeing to pay boutique financier BnP Capital a 256 million rand ($17.56 million) success fee to advise the airline on debt restructuring and fund raising without putting the contract out to tender.

SAA spokesman Tlali Tlali said the contract was awarded without tender due to urgent loan repayments due at the end of June, but denied that the fee was set at 256 million rand.

"We have given BnP Capital an opportunity to respond to matters we raised with them and expect them to revert during the course of next week. Until we have received a response from them and have considered same, contracting between the parties will be stayed," Tlali said.

SAA has been sustained by state guarantees of around 14.4 billion rand and has asked for an additional 5 billion rand from the Treasury.

Finance Minister Pravin Gordhan last week asked parliament to postpone the release of SAA's 2015 earnings report until September, the fourth such request as the Treasury mulls whether to extend more guarantees to the company.

The carrier has been marred by controversy and financial mismanagement for years and has been singled out by ratings agencies among other state companies as a risk to the country's investment grade status.

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