News24.com | Minority shareholders in SAA's Takatso partner not asked to leave, says Harith

The DPE told Parliament last week that SAA's Takatso deal is not in jeopardy.

• Investment firm Harith, the majority shareholder in the Takatso Consortium, does not plan to ask minority shareholders to exit, it said in Tuesday.
• The minority shareholders have indicated that they intend to keep their shares in Takatso despite the recent resignation of Gidon Novick, who represented them on the Takatso board.
• Harith says conflicts of interest will continued to be managed.
• For more stories, go to the News24 Business front page.

The majority shareholder in the Takatso Consortium – South African Airways' chosen strategic equity partner – says it has no plans to ask the minority shareholders to exit, despite the recent resignation of director Gidon Novick.

Novick, who represented the minority shareholders on the Takatso board, announced his resignation as a director earlier this month, citing concerns over being able to fulfil his fiduciary duties due to what he labelled a lack of transparency regarding the deal. He also voiced concerns over the status of funding.

Takatso consists of infrastructure investment firm Harith as majority shareholder, and minority shareholders Global Airways (a full-service leasing company which owns airline LIFT), and an airline management company founded by Novick. Novick was co-CEO of kulula.com operator Comair during its decade-long period of profitability from 2001 to 2011 and, more recently, co-founded LIFT.

Global and Novick indicated that they would remain as minority shareholders in the consortium, despite Novick's resignation as a director.

Still, last week Harith CEO and Takatso chair Tshepo Mahloele welcomed Novick's resignation, saying it would resolve competition issues with LIFT – a position echoed by the official response sent out by the Takatso consortium. According to this response, there was not a lack of transparency, but rather an attempt to manage competitively sensitive information.

READ | No 'back-door merger': Novick hits back at claims of conflict, big demands in SAA showdown

A Harith spokesperson acknowledged Global and Novick's intention to remain shareholders and said "conflicts of interest" would be addressed going forward.

"Harith notes that Global and Novick indicated that they will remain as minority shareholders in the consortium and that any conflicts of interest will continue to be managed," Harith told News24 on Tuesday.

Asked whether the minority shareholders put any money into Takatso, Harith said it was not at liberty to disclose the terms of the SAA deal.

However, it did confirm its own contribution towards costs.

"We can confirm that Harith has been responsible for the costs incurred for closing this transaction," Harith said.

"We are not at liberty to disclose the terms of the share purchase agreement [with SAA], but as Takatso, we will accommodate a reasonable time period to ensure that all parties can achieve the necessary conditions precedent."

These conditions must be met before the SAA transaction can be finalised.

"Of course, the longer it takes to close [the deal], the [more] the window of opportunity will be narrowed," Harith noted.

The Department of Public Enterprises (DPE), SAA's shareholder, announced more than 18 months ago that it chose the Takatso Consortium as a strategic equity partner to take a 51% stake in the airline.

Takatso was supposed to provide the technical skills and leadership for a relaunched SAA – and commit about R3 billion as a much-needed cash injection over two years. The most recent reasons given for the delays are various outstanding regulatory approvals.

SAA relaunched its commercial services in September last year, without the Takatso deal having been finalised, and remains under full government control.

The DPE told Parliament last week that SAA's Takatso deal was not in jeopardy.

"Government is awaiting the completion of the regulatory processes and thereafter will finalise Takatso’s acquisition of the 51% shareholding in SAA. The deal is not at risk," DPE said.

But Mahloele told News24 last week that until government pays SAA’s legacy debt, Harith is unable to wrap up the final funding for the deal. Takatso has indicated from the start that it is not willing to take on any such legacy debt of SAA.

The legacy debt includes the third and final payment in terms of a receivership created when SAA exited business rescue in April last year. At the time, SAA's shareholder, the DPE, estimated that about R3.5 billion was needed for the receivership liabilities. It is unclear how much is still outstanding.

The DPE recently told News24 that government has agreed that the outstanding amount to fully implement SAA's business rescue plan is a legal obligation that government has to fulfil.