06/11/2021 | Press release | Distributed by Public on 06/11/2021 02:38
The Ministry of Public Enterprises (DPE) announced today that the Takatso Consortium, comprising Harith General Partners, a leading investor in African infrastructure and airports, and airline management firm Global Airways, has been selected as the preferred Strategic Equity Partner (SEP) for South African Airways (SAA).
This follows a rigorous, year-long process undertaken by DPE to identify a suitable SEP for SAA. The Consortium will undertake a normal due diligence exercise before the transaction is finalised.
This partnership between Government and private sector is a demonstration of South Africa's ability to develop an entirely homegrown solution to successfully relaunch SAA as a sustainable, competitive and transformed airline.
Public Enterprises Minister Pravin Gordhan says the selection of the Consortium is a ground- breaking decision for Government. He said, 'The partnership brings together South African public and private sector capabilities to reposition SAA. We have looked long and hard at the proposals submitted, and our clear choice of a preferred partner is the Takatso Consortium. The objective of bringing in an equity partner to SAA is to augment it with the required technical, financial and operational expertise to ensure a sustainable, agile and viable South African airline. SAA will contribute to the venture, the brand, the flag, landing slots, route licences, lounges and a successful loyalty program (Voyager).
'With this partnership, we believe we are closer to achieving the important objective of having a sustainable national airline. The new SAA will not be dependent on the fiscus. It will be agile enough to cope with the current uncertainty, and improvement, in global travel. As we recover from the
impact of Covid on the aviation industry, African countries will reopen their borders, enabling the movement of people, cargo and trade. We want to relaunch SAA as an iconic South African brand and are confident that we have the right partner to achieve this objective,' said the Minister. He also said 'Government will retain a 'golden share' in SAA which will ensure that the flag is retained, that it remains domiciled in the country and issues such as transformation goals remain upper-most.'
Objectives of the partnership:
Tshepo Mahloele and Gidon Novick, of the Takatso Consortium, said 'They did not doubt that SAA could be built into an efficient airline that catalyses growth in the South African economy especially tourism. The consortium brings a unique combination of skills and infrastructure funding (including airports) and aviation operator experience. This will ensure the development of SAA into a viable
and agile commercial airline. In addition, we bring unique access to African markets that we are familiar with, because we have deployed more than a billion dollars into a portfolio of critical infrastructure assets across the African continent that support regional economies, and our existing investments in rail, airports and bridges across the continent strongly support this regional integration model.'
'With SAA, we believe we can leverage, with appropriate partnerships, the potential of the aviation sector in Africa, which is being fuelled by urbanisation, intra-African and inter-city trade.' they said.
'The COVID-19 pandemic has presented huge challenges for the aviation industry. However, it has created a momentum to reimagine a future for aviation and its various components, particularly the important role that aviation has played in transporting vaccines and protective and other supportive equipment to other parts of the world. There are great skills and talent available as well as abundance of available aircraft, which makes the quest of creating a world-class airline a lot easier,' they said.
Key elements of partnership:
Ownership: The Takatso Consortium will own 51% of the airline and Government 49%. The intention is to list the airline in the future to address future funding requirements and enable all South Africans to take part in its success.
Funding: The Consortium provides the required capital. There will be no further burden on the fiscus.
Operational capability: The Consortium has a significant operational expertise including, aircraft acquisition, operations, IT systems etc.
Board representation: Board seats will follow the equity interests of the shareholders.
Management representation: The composition of the Management team shall take into account South Africa's national demographics and transformation agenda.
Golden Share: The Government will have a 'golden share' of 33% of the entity's voting rights and certain areas of national interest.
Pre-emptive rights: Standard pre-emptive rights, rights to match etc., will be included for the benefit of both parties.
Historical Liabilities: All historical liabilities will be the responsibility of Government within the amount allocated.
Subsidiaries: As part of the due diligence process, the DPE and the Consortium will carry out a joint assessment on the future of the subsidiaries.
Transformation an Imperative
The partnership is fully committed to an inclusive and diverse team representative of our demography at all levels in the airline.
Once the due diligence exercise is completed and the definitive sale and purchase agreement is concluded, a further release will be issued.
Minister Gordhan said 'Government is pleased that all the elements have been brought together for a leading and sustainable Pan-African airline to emerge and that this will be done without any future reliance on the fiscus.'
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