No Mango buyers have adequate proof of funding

By Carin Smith for News24

None of the potential investors who expressed an interest in Mango has provided an “acceptable form of proof of funding” and they have been given more time to comply.

This is according to a letter from the airline’s business rescue practitioner, Sipho Sono, to those who had indicated an interest in the low-cost subsidiary of state-owned South African Airways (SAA).

If no suitable buyer is found, the airline could end up being liquidated.

Sono’s letter is dated 14 January 2022 and has been seen by Fin24. The potential investors’ names have not been revealed.

Mango’s business rescue plan stipulates that any buyer will have to show it has access to at least R200 million to enable Mango to resume operations and provide the necessary working capital. Proof of funding is a peremptory requirement in order to proceed to the next phase of the bidding process.

The original proposed rescue plan for Mango wanted to use some of the funding from SAA to have Mango restart operations. SAA and its shareholder, the Department of Public Enterprises (DPE), however, stipulated that the funding could not be used for Mango to resume operations.

Sono therefore began searching for an investor to get the airline off the ground again.

An original letter of invitation to potential bidders was sent out at the beginning of December 2021. The aim is for the chosen bidder to acquire the entire issued share capital and certain claims against Mango as part of the restructuring of the airline.

“None of the submissions provided the full and complete suite of documentation or information required by the rescue practitioner in order to evaluate compliance with the qualifying criteria,” states Sono’s latest letter. “In particular and amongst other things, none of the potential bidders [has] provided an acceptable form of proof of funding.”

The potential investors now have until 4 February to supplement their original expressions of interest with the necessary documents, failing which the rescue practitioner reserves his rights to disregard any noncompliant bids.

Sono has indicated that that, in his view, there is a reasonable prospect of rescuing the company and delivering a better outcome for creditors and SAA than if the airline were placed in liquidation.

In his latest status report, Sono said he had received several expressions of interest from potential investors.

Due to the negative impact of the Covid-19 pandemic and related travel bans on the aviation industry, Mango went into voluntary business rescue at the end of July 2021 and has not flown since. It owes R2.85 billion to creditors, and also has about R183 million of un-flown ticket liabilities. The airline cannot resume operations until and unless it secures a new investor to relaunch the airline.

Offers will, among other things, be evaluated on criteria including price offered, certainty and speed of closing the proposed transaction, the extent of the changes proposed to the agreement, how the price will be paid, confirmation of funding capacity and source of funding, operational capacity, B-BBEE status, support from Mango management, impact on staff, and existing potential conflicts of interest between the offeror and Mango.

The selection of the final, chosen investor is at the discretion of the business rescue practitioner.

Sono was approached for comment regarding the lack of proof of funding submitted by bidders, but declined due to “confidentiality issues”.


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