South African Air Seeks 16 Billion Rand in Long-Term Fundingby
Government-owned carrier requests proposals by Sept. 16
SAA won’t consider commercial paper or bond issuance
South African Airways is seeking 16 billion rand ($1.1 billion) in long-term funding that the unprofitable government-owned carrier said will be used for working and capital expenditure and to help manage outstanding debt.
The airline will need to access the funding two weeks after the signing of loan documentation, SAA said in a request for proposals from financial institutions, published in the Johannesburg-based Sunday Times newspaper. The company is seeking rand-denominated secured and unsecured funding with a three- to 15-year tenure and has set a closing date of Sept. 16 for proposals. It won’t consider commercial paper or bond issuance at this stage.
SAA, which last reported a full-year profit in 2011, is dependent on government-guaranteed loans to stay operating and is awaiting a decision by the National Treasury on additional support before it can file overdue financial statements for the year through March 2015.
The notice seeking funding “reinforces the urgent need for parliament to intervene and to have an emergency meeting with SAA,” Alf Lees, the deputy finance spokesman for the main opposition Democratic Alliance, said in a statement.
While the DA has said repeatedly that SAA should be placed under business rescue, the airline last week dismissed the suggestion as “absurd.” SAA is able to and continues to pay its debts as and when they become due and payable, spokesman Tlali Tlali said in a statement on Friday.
The airline had previously appointed little-known BnP Capital as financial services adviser to source funding on its behalf, yet reversed the decision after criticism and a legal challenge from the Organization Undoing Tax Abuse. The South African lobby group said Johannesburg-based BnP had had its Financial Services Board license suspended and that SAA had not followed a competitive bidding process.
FSB accreditation is a “critical requirement” for non-banking financial services intermediaries, SAA said in the request for financial proposals.