Barry Streek
Despite the Swissair setback, the government is determined to press ahead with the “restructuring” of SAA by acquiring another strategic equity partner or even selling part of it to the public through share offer.
But official sources warned this was most unlikely in the near future because of the weak position of the international air travel industry and adverse market conditions.
The government argues that it had no option but to buy back the 20% of SAA’s shareholding it sold to Swissair in June 1999 for R1,4-billion because of the latter’s grave financial woes. In this way, it would avoid implicating SAA in any Swissair liquidation and resulting court battles.
The government believes that the strength of the small print in its contract with Swissair enabled it to exercise its options to buy back the 20% share at a price considerably lower than it paid, and to protect SAA’s interests.
It argues that no one could have expected Swissair’s financial problems when the deal was signed, or that the September 11 terror attacks in the United States would tip it over the edge.
In these special circumstances, sources argue, the buyback cannot be construed as a setback for privatisation. The restructuring of SAA would continue, but almost certainly at a much later stage.
The Democratic Alliance disagreed. The effective renationalisation of SAA was “high regrettable and a significant setback for privatisation”, said DA spokesperson Rudi Heine even if it was the only option the Transnet board could reasonably take.
Heine said former public enterprises minister Stella Sicgau compromised SAA’s listing by selling off Sun Air without any time-frame for the privatisation of SAA.
The failure to deal with both as a package had two negative outcomes: Sun Air went bust, with money is still owed to the fiscus, and the Swissair shares had to be repurchased.
Heine said this highlighted the shortcomings in the government’s approach, as well as its ambivalent selection of strategic equity partnerships an attempt to eke out private capital rather than going the whole privatisation hog.
“The government will doubtless blame the turmoil in the global airline industry following September 11, instead of their problematic policy choices and prevarication on privatisation,” said Heine.
Minister of Public Enterprises Jeff Radebe said the Transnet board had considered various contractual and commercial alternatives available to it, including the acquisition of the shares by a third party and an equity market public offering.
However, it had decided on October 18 this year that it should exercise its right to terminate the shareholders’ agreement and reacquire the Swissair stake. This decision was endorsed by the Cabinet this week.
“The process for the determination of the fair value of the share to be acquired from Swissair has begun, as government seeks to consolidate its shareholding in SAA. The government will further review its restructuring options on SAA going forward, after the reacquisition of the SAA shares is finalised,” said Radebe.