South Africa’s low-cost airline Mango is one step closer to being sold as its preferred bidder delivered proof of funding, according to business rescue practitioner Sipho Sono.
In his latest status report, Sono said the process of trying to sell Mango had progressed “substantially” once the preferred bidder whose identity has not yet been revealed had provided the confirmation of funding. The bidder consortium had to provide a bank guarantee for the full purchase consideration, which is also still not known.
Early in August, the Air Services Licensing Council suspended Mango’s licenses with immediate effect for the maximum allowable period of two years. Mango cannot resume operations unless it secures an investor to buy and relaunch the airline.
Sono indicates he has “engaged extensively” with the preferred bidder to ascertain, among other things, working capital and availability of funds to resume operations, adequate skills to operate an airline, plans for securing aircraft, and route network and expansion plans.
The disposal of shares by South African Airways (SAA) which is Mango’s shareholder -requires the state owned flag carrier to obtain approval in terms of the Public Finance Management Act, approval from the Air Services Licensing Council, and from the Competition Commission.
Sono will engage with SAA and its shareholder, the Department of Public Enterprises, on the next steps to be taken.
High stakes
If the sale transaction fails, Sono will have to implement a wind-down process in terms of the rescue plan. Then creditors will likely receive only 10c in the rand.
Mango went into voluntary business rescue at the end of July last year and has not flown since. It owes R2.85 billion to creditors, and also has about R183 million of unflown ticket liabilities.
All Mango’s employees have been retrenched apart from a few retained on short-term contracts for critical care and maintenance activities required while the process to secure an investor continues.
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Mango was suspended on the grounds that it has not complied with the conditions prescribed in the Air Services Licensing Act. The act requires that an air service “shall not be interrupted for a period exceeding 12 months”. Mango has not operated a commercial flight since 26 July last year.
Sono and the preferred bidder intend to engage with the Council and submit the required documentation as soon as possible to get the suspension lifted.
Source: News24