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- Mango's business rescue practitioner has released another progress report to creditors.
- The report states that Mango's selected investor has agreed to keep its offer open pending the outcome of litigation against Minister of Public Enterprises Pravin Gordhan.
- Mango's rescue practitioner wants the court to force Gordhan to make a decision about the sale of the airline.
- For more financial news, go to the News24 Business front page.
Mango's selected investor has agreed to keep its offer open pending the outcome of litigation aimed at forcing Minister of Public Enterprises Pravin Gordhan to decide on the sale of the airline.
According to the latest report to creditors by Mango's business rescue practitioner, Sipho Sono, the risk still exists that the investor may pull out if the issue is not resolved timeously.
The Department of Public Enterprises, Gordhan, Treasury, and Minister of Finance Enoch Godongwana have all filed notices opposing the court application. The matter will now likely be heard in May.
Mango is a subsidiary of state-owned South African Airways (SAA) and has been in business rescue since July 2021. It has not flown since.
Sono wanted the airline to restart operations in December 2021. However, Gordhan made it clear this could only be done if an investor bought Mango.
After a due diligence process, a consortium, whose identity has not yet been revealed, was selected by Sono as the preferred bidder to buy Mango. Gordhan's approval is needed in terms of the Public Finance Management Act (PFMA).
An updated application for approval was submitted to Gordhan on 28 November 2022. Sono claims this addressed issues raised by SAA against the proposed sale.
Early in February, Sono instituted an urgent application in the high court seeking an order declaring that a valid application in terms of the PFMA was submitted to Gordhan. Sono wants the court to declare that Gordhan's lack of response can either be seen as an approval, or that he be compelled to decide based on the information already before him.
SAA has told News24 previously that it believes Gordhan is within his right to declare his dissatisfaction with the quality of information from Sono to support the transaction for the sale of Mango. SAA claims there is a "reasonable material conflict" regarding the chosen bidder.
Early in March, the DPE told Parliament's Portfolio Committee on Public Enterprises that the key information sought by Gordhan from Sono before deciding on the sale includes seeing the business case of the preferred bidder. This is to determine if it is viable and that adequate working capital is available.
Gordhan also wants information on any foreign ownership involved in the consortium to be sure the sale complies with South African laws.
Sono is concerned that sharing the selected investor's business plan will result in anti-competitive behaviour as Mango will compete with SAA. However, the DPE told Parliament that, in its view, Sono could directly share the plan with Gordhan and the DPE directly instead of with SAA.
"As Government is not an operator in the airline business – but rather a shareholder, there is no conflict of interest the assessment by the DPE and Gordhan of the business plan," the DPE told Parliament.
The DPE further said it is concerned that Sono seeks approval of the transaction without undertaking "comprehensive due diligence". That is why the DPE is defending the court application as it believes Gordhan is entitled to the information requested.
