South Africa’s Comair reports $19mn capital inflow
Comair (South Africa) (MN, Johannesburg O.R. Tambo) has received a capital injection of ZAR270 million rand (USD19 million) through the sale of a non-core business unit and monies owed to it by South African Airways (SA, Johannesburg O.R. Tambo).
The airline, in a statement, announced it sold its SLOW Lounge business unit to South Africa’s FirstRand Bank Ltd for ZAR250 million (USD17.5 million). The transaction will require an amendment to its business rescue plan, a notice of which has been despatched to affected persons.
In addition, it has received ZAR20 million (USD1.4 million) from SAA. This was part of a ZAR1.1 billion (USD70.3 million) settlement in a South African Competitions Tribunal ruling in 2019 relating to an anti-competitive scheme run by the state carrier by which it had paid incentives to travel agents between 2001 and 2006. SAA had paid an initial amount of ZAR289 million (USD20.3 million) in February 2019, with the balance payable in instalments until July 2022. These payments ceased when SAA entered business rescue in December 2019. The flag carrier has since exited administration and is due to restart operations later this month.
Comair, still in administration, on September 1, 2021, resumed scheduled operations after a brief suspension as a result of COVID-19 travel restrictions.
Administrator Richard Ferguson said the new capital injection was a significant step towards the successful conclusion of the business rescue process. “There is still work to be done but these capital inflows, the fact that Comair is back in the skies and again earning revenue, coupled with the commitment by the investors to support the viability and sustainability of the business, all point to a positive outcome,” he said.
As reported previously, Comair went into business rescue (a local form of bankruptcy protection) on May 5, 2020, but restarted operations in December 2020 following a ZAR500 million (USD34 million) capital injection by the Comair Rescue Consortium, which consists of former Comair directors and executives, amongst them US dollar billionaires Rodney Sacks and Hilton Schlosberg, who own Monster Beverage Corp.
The company was delisted from the Johannesburg Stock Exchange on April 7, 2021, which gave it access to ZAR100 million (USD6.8 million) under the COVID-19 Loan Guarantee Scheme put in place by the South African Reserve Bank and large commercial banks. The loan formed part of planned debt funding as set out in the airline’s business rescue plan. Under its terms, Comair’s investors applied to commercial lenders for new net debt funding of ZAR600 million (USD41 million), of which ZAR500 million (USD34 million) had been drawn down by April 2021.
However, it needed additional funds after the airline on July 5, 2021, was forced to suspend all scheduled services of its low-cost brand Kulula Air and British Airways franchise flights in the wake of a dramatic fall-off in travel demand as South Africa extended a lockdown while battling the third wave of COVID-19.