South Africa Seeks Private Finance to Rescue SAA, Mboweni Says
(Bloomberg) -- South African Finance Minister Tito Mboweni rejected accusations from the biggest opposition party that he plans to use state funds to rescue the bankrupt national airline, saying a range of funding options that would source money from the private sector are being considered.
In an answering affidavit to a case filed by the Democratic Alliance in South Africa’s High Court aimed at preventing Mboweni from using government money to meet the 10.1 billion rand ($611.9 million) the administrators of South African Airways say is needed, the minister laid out a range of options.
Those include seeking money from “strategic partners” or private equity as well as tapping pension funds and global financial institutions, he said. Mboweni went on to say that the announcement had committed government to “mobilize” funds for SAA, not provide them.
“The Department of Public Enterprises media statement stops short of reflecting a commitment by government to fund the implementation of the business rescue plan,” Mboweni said. “It clearly conveys government’s position, namely that it is considering various ways within which to mobilize funding.”
The court documents follow Mboweni’s sparring with the DA’s finance spokesman, Geordin Hill-Lewis, on Twitter last week.
The government’s failure to commit to funding the airline itself could provide an obstacle to the administrators, who on Wednesday need to ratify that the conditions precedent for a rescue have been met, failing which the airline could be liquidated.
Mboweni has been at loggerheads with Public Enterprises Minister Pravin Gordhan over SAA for well over a year. While he maintains that the airline, which hasn’t made a profit since 2011, is a drain on the fiscus and should be shut, Gordhan has been adamant that South Africa needs a national airline.
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