Fifty-one rand. Fifty. One. Rand. According to reports emerging on Tuesday, that’s how much it cost to acquire the majority share in South African Airways (SAA) last year. The figure is mind-boggling, and the Treasury is now allegedly lamenting the deal.
An airline for R51? Treasury flag ‘detrimental deal’
A buyer was found for the embattled airline last year – but some sources within the fiscal institution have told Bloomberg that they see the agreement as a ‘threat to South Africa’, given that the terms hammered out have put the government in a terrible position…
- Buyers Takatso Consortium took a 51% shareholding in South African Airways last year.
- Indeed, 51 seems to be the lucky number – that’s how many rand it cost to secure the majority stake of SAA.
- The Treasury now believes this sale ‘is a threat to SA’, as the terms of the deal heavily favour Takatso.
- That’s because the buyers have the right to determine if any ‘ongoing liabilities’ for SAA must be settled by the government.
- It is feared the terms may result in the state ‘providing funds in excess of its shareholding’.
- During a hearing this week, Finance Minister Enoch Godongwana insisted that the substance of the Treasury’s letter ‘still stands’.
SAA allegedly sold ‘for the same price as a pint of beer’
The most eye-catching detail in the Treasury’s reported response, however, comes when it refers to the cost of its majority stake – which was apparently valued at no more than ‘a few US dollars’ – or R51, to be precise.
“The terms may result in the state providing funds in excess of its shareholding… The strategic equity partner may assume very minimal shareholder risk for the acquisition of a majority shareholding a the purchase price of 51 rand [about $3.16].”
The controversy has been picked up online, and social media users have reacted with horror to the purported small print in the SAA deal. Tito Mboweni, the Finance Minister at the time of the sale, posted this indirect response to the critics.
Something that I have learned in the private sector: do not be emotionally attached to your business units. Sell if needs be. Why the SA government has this attachment to SAA is mind boggling. I will leave it here.
— Tito Mboweni (@tito_mboweni) May 10, 2022