Mango sale in jeopardy as it awaits key approvals

Sono is considering whether issues raised can be resolved.

• Minister of Public Enterprises Pravin Gordhan has not approved the sale of Mango within the period allowed by the Public Finance Management Act.
• However, Mango’s parent company SAA has agreed with the Department of Public Enterprises on an extension.
• In his latest status report, Mango’s business rescue practitioner indicates that this delay puts the sale at risk.
• For more financial news, go to the News24 Business front page.

A “sudden turn of events” in that Minister of Public Enterprises Pravin Gordhan has not yet approved the sale of Mango, means the transaction may have to be abandoned and the airline wound down.

This is according to the latest status report to creditors released by the airline’s business rescue practitioner, Sipho Sono, on Thursday.

An updated application for approval in terms of the Public Finance Management Act (PFMA) had been submitted to Gordhan by Mango’s parent company South African Airways (SAA) on 28 November 2022. In his previous status report at the beginning of December 2022, Sono indicated that the updated application addressed issues raised by SAA against the sale.

In that previous report, Sono indicated that he was “hopeful” that Gordhan will approve the sale of the low-cost airline “imminently”.

Sono states in his latest report that, regrettably, Gordhan has not made a decision yet. The PFMA allows for an application to be deemed as approved if there is no response within 30 days. However, SAA and its shareholder, the Department of Public Enterprises (DPE), agreed on an extension period.

“We understand that the minister wrote to SAA on or about 20 December 2022, expressing a view that he was not completely satisfied with the responses to the queries that were raised by SAA [about the Mango sale],” states Sono’s report.

It is also his understanding that National Treasury has indicated to SAA that it does not regard SAA’s application to the DPE as complete and would also like to have a submission made directly to it. 

Sono has not been provided with copies of the letters from the DPE and National Treasury. However, he was sent a list of Treasury’s concerns, which he does not reveal in his report. He is currently considering whether these issues can be resolved.

Mango was placed in voluntary business rescue in July 2021 and has not flown since. Sono wanted Mango to restart operations on 2 December 2021. However, the DPE made it clear this could only be done if an investor bought Mango. After a due diligence process, a consortium, whose identity has not yet been revealed, was selected by Sono as the preferred bidder to buy Mango.

If the PFMA application is approved, Competition Commission and other regulatory approvals would then still be needed.

The DPE declined to comment. News24 has also reached out to SAA and this article will be updated if a response is received.