Tag: business rescue

By Londiwe Buthelezi for Fin24

The business rescue practitioners for Edcon say the only way to save the company and the livelihoods of its thousands of employees is through “accelerated sales” of the clothing retailer’s divisions to interested parties.

Edcon, which owns Edgars and Jet Stores, announced on April 29 that it would file for voluntary business rescue after the nationwide lockdown exacerbated its already dire financial position, causing the group to lose about R2 billion in sales when it was not allowed to trade.

Now the BPRs have delivered a rescue plan for the retailer, published on Edcon’s website on Tuesday morning. According to the plan – an “accelerated sales process” of divisions that can be sold and a winding down of those they may fail to sell would be in the best interests of all stakeholders. The BRPs said this proposal was a product of consultations with Edcon’s creditors, landlords, employees representatives and trade union, Saccawu.

No parties have shown interest in investing in or providing funding to Edcon, said the company.

Mr Price has rejected speculation that it has been looking to acquire retail chain Jet, a unit of struggling fashion giant, Edcon, which recently went into business rescue.

“The Group has no intention to acquire Edcon, in part or in whole,” the Durban-based retailer said in a statement on SENS last week.

However, a recent Business Day article stated that Edcon has attracted 15 entities interested in buying one or both of its two divisions.

The sale of Edcon’s businesses as a going concern would allow the company to transfer some of the employees to new owners, resulting in a significant number of jobs being saved.

“If the sale is implemented, the BPRs will seek to obtain the sale of the business or its divisions as going concerns, thereby resulting in the transfer of the relevant employees and many jobs being preserved. Employees who are retrenched, if any would be in a better position than in a liquidation,” wrote the BRPs in the business plan.

They added in a statement published by Edcon on Tuesday that creditors and landlords would also be in a better position if Edcon entities continued trading.

According to the BRPs, a significant number of parties have already expressed interest in the sales process. Initially, the BRPs received interest from 19 parties who were keen to participate in the accelerated sale process, they said. Fifteen of these complied with the requirements to proceed as preferred bidders. They are required to submit their final offers to by the end of June 2020 and finalising of successful bids will happen by early July 2020.

Divisions that aren’t sold in that process could be auctioned or sold in private treaty sales, among other means. The BRPs said Edcon employees continued to receive their salaries in April and May and they expected to make such payments again at the end of June.

Kulula owner Comair in business rescue

By Bonga Dlulane for EWN

Comair said that it had decided to enter voluntary business rescue because it wanted to ensure the long-term survival of the company.

The aviation company owns Kulula.com and is the local operator for British Airways.

Comair, like other airlines, stopped operating in March after government declared a national state of disaster as a result of COVID-19.

The country is currently under level four lockdown restrictions and airlines are expected to resume full domestic operations under level two.

Comair said that while its business model was sound, it’s been interrupted by the lockdown restrictions.

The company said it didn’t expect to be back in business before October or November this year.

It said the best way to ensure the long-term survival of the company was to implement a business rescue plan and see if a return to operations would be achievable once the restrictions are lifted.

The company said this decision was prudent and in the best interest of shareholders.

SAA to cut 4 700 jobs

Source: IOL

South African Airways (SAA) has issued notice to all 4 700 of its employees that it intends to begin consultations on retrenchments, the business rescue practitioners (BRPs) for the troubled national carrier said on Monday.

“The joint BRPs today announced that South African Airways SOC Limited has issued a notice advising its employees of the intention to begin imminent consultations in terms of section 189 of the Labour Relations Act 66 of 1995,” a spokeswoman for the BRPs said.

They stressed that retrenchments, along with route and fleet reductions, were essential to avoid liquidation and said therefore a shorter consultation process had been proposed.

The notices went out to all unions representing staff and management, following talks over the weekend and earlier with labour representatives.

A reduction in route flow as well as the airline’s fleet were unavoidable, and apart from cutting staff, salaries could also be reduced, said the BRPs.

“The BRPs contemplate that all 4 708 employees will be affected and the number of jobs that will exist in the restructured organisation will be the subject of the consultation process.

“Significant changes to conditions of employment, including remuneration and benefits, appear unavoidable and will be sought by agreement.”

They added that they would seek to preserve as many jobs as possible but cautioned that the outlook for SAA had dimmed further following the spread of the Covid-19 virus and its impact on international travel.

SAA has stacked up losses of R26 billion over the past six years and was placed in voluntary business rescue in December.

“Load factors on the airline have declined steadily from August 2019 to a low of 71 percent in January 2020. Forward sales have also declined significantly with all markets showing negative or minimal growth, within a very competitive market. The recent marked decline in travel due to the Covid-19 virus will further exacerbate matters.

“The changes required at SAA are therefore both structural and economic. They are urgent if liquidation is to ultimately be avoided in which event all employees will lose their jobs.”

The business rescue team, which is due to submit a report to government at the end of March, said they were proposing a fundamental restructuring to enable SAA to function as a sustainable African airline and the current structure did not allow for this.

The restructuring process at this stage does not affect staff at SAA’s subsidiaries Mango, SAA Technical and Airchefs.

Initial consultations with staff and representatives will be held on Thursday.

The legally prescribed 60-day consultation process would end on May 8. However, the business rescue practitioners said an expedited month-long consultation process ending April 8 had been proposed in an effort to avoid liquidation.

It is essential that this process achieve an agreement between the company and the unions that will be communicated to the creditors and the lenders as part of the business rescue plan, if the business rescue plan is to be approved and liquidation avoided.

“The business rescue practitioners believe that if this is achieved, SAA will be sustainable and the future of SAA can be ensured, without further fiscal assistance.”

By Lameez Omarjee for Fin24

The Development Bank of Southern Africa has committed R3.5bn to SAA, business rescue practitioners have confirmed.

In a statement issued on Tuesday afternoon, business rescue practitioners Les Matuson and Siviwe Dongwana said stakeholders can continue flying SAA now that required funding has been secured.

“Stakeholders of the airline should now have comfort that the rescue process is on a significantly sounder footing, and that passengers and travel agencies and airline partners may continue to book air travel on SAA with confidence,” they said.

Earlier on Tuesday Bloomberg reported that government may have received funding from DBSA, which would be government guaranteed. Treasury, the DBSA and SAA would not comment at the time.

When SAA was placed into business rescue, by order of President Cyril Ramaphosa, in December 2019 – both government and creditors committed to jointly provide R4bn.

Local commercial banks had provided R2bn in post-commencement financing – in addition to existing exposures to SAA. However, by mid-January government still had not been able to keep its end of the bargain.

In recent weeks government has managed to obtain the balance required to meet short term liquidity requirements of the airline until the business rescue plan is published. Fin24 understands that the plan will be finalised in February.

“Discussions held with financial institutions have been fruitful with the Development Bank of Southern Africa offering to provide the next tranche of PCF, for a total amount of R3.5bn, with an immediate draw-down of R2bn.

“Furthermore, funding for the restructuring phase after the plan is adopted is being considered by potential funders,” said the business rescue practitioners.

The airline has been facing a liquidity crisis and earlier this month, had to cancel flights in order to save cash.

Following speculation that the airline was going to fold, the Department of Public Enterprises issued a statement on Sunday January 19, 2020 assuring the public of its commitment to saving the airline.

“We are determined to contribute to the Business Rescue process so that we could minimise job losses and give birth to a rejuvenated SAA that all South Africans could be proud of. Collective effort is needed to make SAA as a premier African airline and Star Alliance member,” the Department of Public Enterprises (DPE) said at the time.

SAA cancels flights as business rescue bites

By Selene Brophy for Traveller24

South African Airways (SAA) has consolidated its domestic and international flights schedule due to low demand, as the process of business rescue looks to conserve funds.

So while these flight routes have not been cancelled outright, flights with too few bums on seats are being re-accommodated.

SAA has confirmed the following domestic and international flights have been cancelled between the airline’s main hub Oliver Tambo International Airport Johannesburg (JNB) and Cape Town (CPT), as well as between Johannesburg (JNB) and Durban’s King Shaka (DUR) airports.

Mango has confirmed it is re-accommodating affected passengers on certain routes operated by both airlines to minimise disruption.

Domestic flights cancelled include routes between Johannesburg and Cape Town and Johannesburg and Durban. Certain flights on the Johannesburg – Munich, Germany route have also been cancelled.

SAA says it will be reviewing further possible flight schedule amendments over the coming days.

Affected passengers seeking a refund are being advised to contact the airline or their travel agent to make alternative arrangements.

News24 Journalist Jenna Vester, who was at Cape Town International on Tuesday morning, reports that “no obvious disruptions for SAA were immediately apparent”.

The onus is on SAA to accommodate passengers affected by these recently announced flight cancellations due to low demand. However, if passengers elect to cancel any future, operating SAA flights it should be noted that they won’t automatically receive a refund, according to industry expert Natalia Rosa.

Added to this specific cancellation fees will apply. The usual credit card insurance and reversal of purchase, for services or goods not delivered should however apply in the instance of flight cancellation.

SAA has advised it will not be able to assist with disruptions at the airport due to the strike.

Domestic operators to contact to make urgent alternative flight arrangements include: Mango, Airlink, British Airways and Kulula.

SAA has had a torrid 2020 so far, with the company being forced to sell some of its airplanes – and now even some profitable routes – to become more liquid.

SA Post Office (Sapo) CEO Mark Barnes is in the process of finalising a domestic syndicated loan facility to raise some of the R3,7-billion for the company that urgently needs the funds to stabilise its operations and start generating revenue‚ Telecommunications and Postal Services Minister Siyabonga Cwele said on Tuesday.

He told MPs during his speech on his budget vote in the National Assembly that his department would assist the company to raise the funding from the markets. The approximately R3,7-billion the company needed “urgently” would be in addition to the R650-million capital injection made by government recently.

“Sapo remains a strategic entity for extending government‚ e-commerce and financial services to South Africans far and wide through its approximately two and a half thousand (2 448) outlets‚” says Cwele.

He notes that the company was correcting the maladministration of the past 10 years by implementing the recommendations of the Special Investigating Unit (SIU) and the public protector‚ as well as its own strategic turnaround plan

Cwele says government was committed to ensuring that Sapo subsidiary Postbank became a developmental bank that would provide simple‚ easy-to-understand financial products and services for the unbanked and underserviced. Last year‚ the bank opened over 219 000 new savings accounts for the unbanked.

The response by the Reserve Bank to Sapo’s application for Postbank to be a fully-fledged banking company was awaited. This would open the way for the appointment of the Postbank board‚ its incorporation as a separate company and the registration of the bank controlling company.

Cwele says the inintegrated ICT white paper – promised by the end of March – would be finalised in the next few months.

The policy‚ he noted‚ would reduce barriers to entry “by moving away from monopolistic infrastructure based competition‚ to open access broadband networks”.

“A new spectrum policy will support open access networks as it aims to open the use of high-demand broadband spectrum for use by all licensees while adequately compensating those who invest in infrastructure.

“The ultimate target is to benefit the consumer by increasing consumer choice‚ reduce costs‚ increase innovation‚ and encourage all consumers to fully experience the internet.”

The minister noted that mobile broadband 4G/LTE coverage now stood at between 35 and 53%.

By Linda Ensor for www.timeslive.co.za

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