The Development Bank of Southern Africa (DBSA) says it had to provide a R3,5 billion loan to South African Airways (SAA) to prevent it from collapsing or being liquidated. Part of the money is a portion of funding promised by government and private banks when SAA was placed under voluntary business rescue.
DBSA was presenting information on its performance to the NCOP’s Finance Committee. Some members raised concerns that the money was being wasted on a failing state-owned entity. However, DBSA Chief Investment Officer, Paul Currie, said the funding was necessary to facilitate the voluntary business rescue process.
“In certain sectors, there is a sentiment that this thing should just be collapsed and destroyed because it’s just eating money. But the reality is there is some inherent value. We don’t know what that is. But the whole point of putting a business rescue process in place is to do it in an ordered fashion to determine what that value is then off the back of that, to ensure that there was stability and space for the business rescue practitioner to do their job. We essentially agreed to put the money in there. It creates the ability in the transport sector, it’s economic development and the retention of economic value.”
DBSA acting CEO Paul Currie says had the bank not provided #SAA with the R3.5bn loan, the airline would have collapsed and forced into liquidation.
He says the loan is guaranteed by government. #sabcnews
— Bulelani Phillip (@BulelaniPhillip) February 4, 2020