The South African government has retained special voting rights in the country’s national carrier even after it sold a majority stake and will receive Rand 3 billion ($ 186 million) in preferred stock that can be redeemed through future cash flow.
This means the state will benefit the new owners, the Takatso Consortium, to revive a carrier that has struggled for years of heavy losses, corruption and mismanagement, according to a statement from the Department of Public Enterprises on Thursday.
Takatso – made up of a local jet leasing firm and private equity firm – will provide Rand 3 billion of working capital and has valued SAA’s assets at roughly the same amount, the department said.
The group agreed to take over control of the airline nearly a year ago for a notional sum of about $ 3, in exchange for expense commitments and responsibility for operations.
“R51 was a nominal amount set some time ago when SAA was not a moving company at all,” Public Enterprise Minister Pravin Gordhan said over the phone. “While it is still in the recovery phase now, things are much better for the government than when that price was set.”
The details emerged after the National Treasury criticized the terms of the deal, saying SAA represents “potential liability” as the government may be responsible for certain costs. The state will still be hooked on pending “business rescue obligations” resulting from the company’s nearly 18-month bankruptcy proceedings, Takatso said in a separate statement.
The government’s voting rights, known as golden shares, will mean SAA cannot be sold without its consent and the state will retain a stake of at least 33.3%, the DPE said. It will also have full voting rights on “matters of national concern”.