The ANC says that it will step in and intervene in SAA’s business rescue if it believes that the business rescue practitioners are making decisions that go against its goals for the airline.
Following president Cyril Ramaphosa’s State of the Nation Address this week, ANC treasurer-general Paul Mashatile said that, as the main shareholder, the government has the right to protect its assets.
“The business rescue practitioners do not own SAA, we do. The day they do something we think is not in line with what we want, we will intervene because we appointed them,” Mashatile said.
Similar sentiments were expressed by ANC secretary-general, Ace Magashule, the City Press reports.
Magashule said it was the intent of the ANC and its alliance partners to retain SAA at all costs. The party’s critical stance comes after SAA shut down all domestic routes in the country, except for the Johannesburg-Cape Town route.
It sees areas such as KwaZulu Natal and the Eastern Cape as major growth areas for the country and says that they cannot simply be shut out this way.
Can government intervene?
According to South Africa’s business rescue laws, business rescue practitioners are empowered to make the necessary decisions to make a business going through the process viable.
The administrators have defended the move to cut the domestic routes, despite objections from government, saying that it is “in the best interests of SAA”.
“They are intended to make the airline commercially and operationally sustainable, free from the requirement of future funding from the government post the implementation of the restructure,” the administrators said.
However, shareholders are not completely excluded or blocked from the business rescue process.
Holders of a company’s securities have voting rights on any business rescue plans put forward by the practitioners. If any such plans are rejected, they may present alternatives. Once a rescue plan is accepted and adopted through 75% share of the vote, the administrators can proceed, unimpeded.
Following this, stakeholders can approach the country’s courts for intervention.
Notably, though, SAA’s business rescue plan is yet to be published.
The voting rights in respect of the business rescue plan will be proportional to the extent of the debt owed to the creditors – the weighting of which will be set out in the plan itself.
Ten days after the plan is presented to creditors and stakeholders, they must vote on the plan at a creditors’ conference. This is currently expected to be held in March 2020.