At least 17 private-sector investors have approached the provisional liquidators of SA Express to either purchase its aviation assets or entire operations by taking over the government’s shares in the state-owned airline.
SA Express, the troubled airline whose flight routes serve SA’s smaller cities, is fighting for its survival after the High Court in Johannesburg placed it under provisional liquidation on 28 April 2020. This was after the SA Express business rescue practitioners, Phahlani Mkhombo and Daniel Terblanche, declared that the airline had no reasonable prospect of being rescued because it had completely run out of cash, especially without financial support from the government.
The team of SA Express provisional liquidators – led by Aviwe Ndyamara – has received two offers from investors to buy the entire operations of the airline while most investors want to participate in its asset-stripping process.
Ndyamara is racing against time to sell SA Express assets to pay creditors owed more than R2.5-billion or find a buyer that would take over the airline’s debt and the government’s shareholding. Ndyamara will return to the high court on 6 September 2020 to convince it to not convert the provisional liquidation of SA Express into a final one, which would involve its death after 26 years in the skies.
Ndyamara hired Liquidity Services, an operator of online auctions, to manage the bids tabled by potential investors of SA Express – bids that include buying the airline as a going concern, equity investments and the purchase of its aviation assets.
Liquidity Services ran a bidding process that ended on 21 July 2020, which attracted investors mostly interested in purchasing SA Express assets including Bombardier CRJ 200 jets, engine parts and rotables, workshop equipment, IT infrastructure and aviation-related licences.
Ndyamara and Liquidity Services did not respond to written questions about the bidding process at the time of publishing despite being given seven days to do so.
The bidding process has attracted Fly Modern Ark, an aviation company headed by businessman Theunis Crous, and equity crowdfunding platform Uprise.Africa. Both companies want to buy the government’s shares in SA Express and revive the airline’s operations.
The proposals tabled by Fly Modern Ark and Uprise.Africa have been assessed by Liquidity Services and might be handed over to Ndyamara for further assessment. Any buyout offer must be approved by the Department of Public Enterprises, which is the sole shareholder of SA Express.
Business Maverick was informed that an unnamed foreign aviation company was also interested in buying SA Express shares, but aviation laws in SA put a 25% ownership cap by foreign entities of a domestic airline. In other words, the foreign aviation company cannot wholly own SA Express if it emerges successful in its bid.
Offers on the table
Arguably it is an open secret that Fly Modern Ark’s Crous has been interested in SA Express. With the backing of unnamed local and overseas funders, Crous approached the former SA Express business rescue practitioners (Phahlani Mkhombo and Daniel Terblanche) in March 2020 to buy SA Express’ entire operations by injecting R200-million to pay its creditors and restructure its balance sheet. This offer wasn’t successful.
Business Maverick understands Crous has approached Ndyamara with a buyout offer of R100-million, which is subject to a due diligence process of SA Express’s existing assets and aviation licences, which are crucial to the airline’s operation.
Crous confirmed that Fly Modern Ark tabled a buyout offer for SA Express. He said: “We are not commenting at this stage”.
Meanwhile, former Skywise co-chairperson and co-owner Tabassum Qadir is behind Uprise.Africa’s efforts to revive SA Express. The Uprise.Africa proposal aims to raise money through its crowdfunding platform – funds that will be used to pay SA Express creditors, restart its operations and save jobs in the process. At a recent count, SA Express had 691 workers, who stand to permanently lose their jobs if the airline is placed under final liquidation.
Uprise.Africa said it had been engaged by a group of former SA Express workers to help raise the capital needed to save the airline. It’s unclear how much money Uprise.Africa plans to raise for SA Express. Uprise.Africa wants to perform due diligence on SA Express before it launches the crowdfunding platform. DM/BM
"Having a baby is like getting a tattoo on your face. You really need to be certain it's what you want before you commit." ~ Elizabeth Gilbert