/ 23 November 2001

SA to buy back 20% Swissair stake in SAA

Pretoria | Thursday

THE South African government is to buy back a 20% stake in the country’s national carrier, South African Airways, that it sold to Swissair two years ago, a government minister said on Wednesday.

Public Enterprises Minister Jeff Radebe said the government’s transport subsidiary Transnet would rebuy the shares for a sum still to be negotiated with the troubled Swiss airline.

The 20% stake in SAA, along with an option for a further 10% was sold to Swissair in June 1999 for R1,4-billion (about $200 million at the time) as part of the government’s privatisation process.

But the strategic equity partnership soured recently when Swissair filed for bankruptcy after facing a series of problems owing to a costly expansion plan.

Radebe said the original deal entitled Transnet to terminate the agreement in such an event and re-acquire the shares at 85% of its current value. Swissair had agreed to this but a settlement had yet to be reached as to the current value of the shares, Radebe said.

“Those are matters for negotiations between ourselves and Swissair. Last week some of our officials were in Zurich to discuss the principles. Now we are going to embark on negotiations with Swissair to arrive at a fair value,” Radebe said.

“Within the next week or so we should know where we stand.”

Radebe would not be drawn on whether the current turmoil in the aviation industry meant South Africa would probably buy the shares back for significantly less than it sold them for.

“The key word is fair value. They themselves also want to conclude this issue as soon as possible given their financial turbulence. I am sure we will arrive at a consensus figure that will ensure we close this deal as soon as possible,” he said. – AFP