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- Mango's business rescue practitioner is turning to the court to try to force Minister of Public Enterprises Pravin Gordhan to decide on a proposed sale of the airline.
- Mango needs Gordhan's approval to implement the adopted business rescue plan, which contemplates SAA selling all its shares in Mango to an investor.
- Court documents, seen by News24, indicate that Mango's business rescue practitioner now wants the court to declare that Gordhan's refusal to make a decision is unlawful and constitutionally invalid.
- For more financial news, go to the News24 Business front page.
Mango's business rescue practitioner is turning to the courts to try to force Minister of Public Enterprises Pravin Gordhan to decide on a proposed sale of the low-cost airline.
According to court documents, seen by News24, Mango intends to bring an application in the North Gauteng High Court in Pretoria later this month to declare that Mango and South African Airways (SAA) - Mango's parent company - submitted a valid and complete application for a proposed sale of Mango to Gordhan in terms of the Public Finance Management Act (PFMA).
Mango needs Gordhan's approval to implement the adopted business rescue plan, which contemplates SAA selling all its shares in Mango to an investor.
According to a previous business rescue report by Sono, an updated application for approval in terms of the PFMA had been submitted to Gordhan by SAA on 28 November 2022, addressing issues raised by SAA against the proposed sale of Mango.
Seeking answers
Sono now wants the court to declare that Gordhan's refusal to make a decision is unlawful and constitutionally invalid. Sono also wants the court to declare that Gordhan is not entitled to request Mango to furnish further information. The court will be requested to direct that Gordhan makes a decision regarding the PFMA application for the sale of Mango and communicate the outcome to Mango and SAA, including providing reasons for the lack of making a decision.
If Gordhan then fails to comply, Sono wants the court to rule that Mango and SAA may then assume that the PFMA application has been approved and go ahead with the proposed sale.
"Regrettably, Gordan and more recently SAA have sought to frustrate [the sale of Mango]. They have refused to regard the information I placed before Gordhan as constituting a valid application in terms of the PFMA," Sono states in the court documents.
"Gordhan's decision is vitally important for the implementation of the business rescue plan I have prepared and has been lawfully adopted by the affected persons, and particularly the creditors of Mango in terms of the Companies Act."
'Intolerable'
Sono claims that Gordhan has repeatedly requested additional information from SAA or of him as the rescue practitioner, "despite the fact that I have already furnished the relevant and necessary information to him to make a decision".
Sono regards Gordhan's repeated requests for further information as "unnecessary delays that constitute a manifest breach of the PFMA".
"The continued delays by Gordhan and SAA are intolerable. They are inconsistent with Gordhan's constitutional and statutory duties which call for him to do his duties diligently and without delay. They now imperil Mango's very survival and if not urgently corrected by this court, will result in no other alternative than Mango being wound down," states Sono.
The court documents indicate that Mango opposes the matter being referred to mediation. It states that "previous attempts to meaningfully engage with [Gordhan] has been unsuccessful and there is, accordingly, no prospect of a successful mediation".
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.
UPDATE: SAA responded on Friday that it has taken note of the court application by Sono regarding the processes governing the disposal of SAA's shares in Mango to the chosen investor. In the view of SAA, Gorhan's requests for further information on the proposed investor are legitimate.
"Sono is asking the court to compel the Minister to approve the sale of Mango as a matter of urgency. He further complains about requests for details such as the identity and the commercial capability of the preferred bidder," states SAA.
SAA explains that, as a state-owned enterprise, the board of SAA is bound by an agreement with Gordhan that he has the right to seek as much information as necessary for him to act responsibly in supporting an asset disposal application.
Therefore, SAA believes Gordhan is within his right to declare his dissatisfaction with the quality of information from Sono to support the transaction for the sale of Mango. It claims there is a "reasonable material conflict" regarding the chosen bidder.
"This present dispute erupted around the nature of the due diligence required on the prospective investor and their business plan," states SAA.
SAA states that an investor has to be capable to restart the airline. "SAA has nothing to benefit from a liquidated Mango. If Mango is wound down, SAA is liable for the R80-million guarantee issued in favour of the Air Services Licensing Council for passenger protection liability," states SAA.
* This article was updated on Friday 10 February with comment by SAA.
