South African Airways seeks EOIs for LCC unit, Mango

South Africa’s stricken state-owned budget carrier Mango Airlines (JE, Johannesburg O.R. Tambo) is to secure a new investor by the end of March next year, with expressions of interest (EOI) invited by December 20 this year, according to its administrator Sipho Sono.

In an update to creditors, he said: “It is anticipated that the process to secure a successful bidder, inclusive of concluding the relevant acquisition agreements, will be completed by the end of March 2022”.

A call for expressions of interest from interested investors has been published. Respondents will be required to conclude a non-disclosure agreement and provide the requisite proof of financial and operational capacity. The closing date for bids is 1700L (1500Z) on December 20, 2021. Shortlisted parties will be notified by January 14, 2022, and will be required to complete their due diligence of the airline by February 14, 2021. Binding offers will have to be submitted by no later than February 21, 2022. The selection of the investor will remain at the sole discretion of the administrator.

This follows on creditors and the sole shareholder, South African Airways (SA, Johannesburg O.R. Tambo), on December 2 having adopted an amended business rescue plan that centres on the parent company selling off the subsidiary to a new strategic equity partner.

Sono said he would now proceed to implement the plan, with the key deliverable being the completion of the process to solicit a preferred bidder to conclude the acquisition of Mango. In the interim, the airline will be mothballed, but its route rights and licences will be preserved.

As reported previously, the amended plan published on November 25 proposes that an outstanding state allocation of ZAR719 million (USD44.4 million) be used to partly settle employee and concurrent creditor claims.

A new investor would acquire all of Mango’s shares for a nominal consideration, whereafter the investor would subscribe for additional shares in the company, the proceeds of which would be used to top-up payments to the concurrent creditors. After that, the debt acquired by the investor through the cession of claims of concurrent creditors would be converted to equity to restore the company to solvency.