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SAA defers move to restructure $1 billion debt

July 20, 2016 Headline News No Comments Email Email

egtmedia59South African Airways (SAA), a carrier whose financial management has been called into question in recent years, said on Sunday it had put on hold a deal to restructure ZAR 15 billion (AUD 1.38 billion) of debt.

The airline has asked for more time to respond to demands by lobby group OUTA (Organisation Undoing Tax Abuse), which wants the airline to halt its controversial procurement deal with a little-known “boutique financier”, according to Business Day in South Africa.

SAA’s board reportedly defied treasury advice by agreeing to pay boutique financier BnP Capital a ZAR 256 million success fee to advise the airline on debt restructuring and fund raising. This was without putting the contract out to tender.

OUTA has been urging SAA to suspend awarding the controversial deal to BnP, which stands to pocket a fee estimated at ZAR 256 million (AUD 23.5 million), Business Day said.

OUTA has threatened to approach the High Court.

In the past, SAA’s appointment of another little-known advisory services provider in an Airbus lease transaction, also came into question.

South Africa’s Finance Minister Pravin Gordhan last week asked Parliament to postpone the release of SAA’s 2015 earnings report until September.

The Economist magazine last year described SAA as one of South Africa’s “economic albatrosses”.

Written by William Sykes

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