- State-owned carrier had been criticized for BnP appointment
- Airline had 7.2 billion rand debt maturing at end of June
South African Airways has dropped BnP Capital as financial services provider, reversing an earlier decision to hire the company to source funding on its behalf.
“SAA management took a decision to terminate all BnP services to the airline as a prospective financial services provider in relation to SAA’s initiative on debt consolidation,” the unprofitable state-owned carrier said in an e-mailed statement on Thursday. “No payments had been made to BnP Capital.”
SAA appointed Johannesburg-based BnP as transaction adviser in March to assist with plans to consolidate the airline’s debt, SAA said. After a potential lender withdrew from the process in April, and with 7.2 billion rand ($506 million) of debt maturing at the end of June, SAA asked BnP in May to seek funding on its behalf, the airline said.
The BnP deal was criticized by the Organization Undoing Tax Abuse, a lobby group, which described BnP as “a small and relatively unknown financial advisory firm,” which has had its Financial Services Board license suspended. OUTA argued that the agreement was illegal because SAA didn’t follow a competitive bidding process.
The airline is dependent on government-guaranteed loans and is awaiting a decision by the Treasury on whether to grant additional support. SAA was able to secure an extension on maturing loans to avoid defaulting on its obligations, spokesman Tlali Tlali said in an e-mail late Thursday.
The carrier suspended Treasurer Cynthia Stimpel earlier this month pending an investigation into a misconduct charge. The disciplinary action was unrelated to a report in Business Day newspaper that she had objected to the decision to hire BnP Capital, Tlali said at the time.