The Department of Public Enterprises (DPE) has issued a statement affirming that the statement made by Public Enterprises Minister Pravin Gordhan on June 11, regarding State-owned national flag carrier South Africa Airways (SAA), was “consistent” with President Cyril Ramaphosa’s comments on the airline on June 22. The statement and comments both concerned the finding of a strategic equity partner (SEP) for SAA.
The DPE highlighted that the Minister’s June 11 statement had explicitly stated that the required due diligence would be completed and all the obligatory regulatory approvals obtained for the conclusion of the legal agreements needed to create the partnership between the government and the SEP. The statement had further affirmed that the DPE and SEP consortium would carry out a joint assessment of SAA’s subsidiaries (which included SAA Technical and low cost carrier Mango), as part of the due diligence process. Once the due diligence process had been concluded, and the “definitive” agreement for the sale and purchase of SAA concluded, the DPE would issue another press release.
“The announcement followed a rigorous, year-long process undertaken by DPE to identify a suitable SEP for SAA,” assured the department in its statement. “This process commenced whilst SAA was under the control of the business rescue practitioners. The Ministry has been transparent in communicating the milestones in the process to announce the preferred SEP for SAA.”
The process has involved nine steps, and it was this process that the President had explained in his comments. (Six of these processes have been completed.)
Step one was the receipt of more than 30 expressions of interest (EOIs) for SAA (and its subsidiaries), with step two being the appointment of an independent transaction adviser to assess the EOIs. Step three saw the transaction adviser screen the EOIs, with step four being the creation of a shortlist of possible SEPs. Step five was a re-evaluation of the shortlist, leading to step six – the selection of a preferred SEP, and the granting to it of “appropriate exclusivity”.
Step seven is the due diligence process. There are two elements to this: the DPE’s due diligence on the SEP consortium, and the SEP’s due diligence into SAA. Step eight would be the negotiation and signing of the sale and purchase agreement. Step nine was not a sequential process to the above steps, but a parallel process, being concerned with the obtaining of all the required regulatory and legal approvals, including ensuring compliance with the Public Finance Management Act.