The business rescue of SAA has been prolonged after a dispute broke out between the government and the consortium of banks to which SAA owes money, on the eve of the finalisation of the rescue plan.

A guarantee confirmation letter to lenders stating when and how they will be repaid is one of the conditions necessary for the success of the rescue and was not met by the close of business yesterday, according to a Business Day report.

The Treasury said that the letter was ‘following internal due diligence processes’.

This means that another creditor’s meeting will be held today, extending the process well into its seventh month. A further extension to provide the letter is likely.

Before the start of the rescue, a consortium of domestic banks was owed about R9.2bn plus interest, which is long overdue for repayment. When the business rescue process started banks provided a further R2bn and the Development Bank of Southern Africa (DBSA) provided R3.5bn. The Treasury undertook to repay the latter two amounts by 31 July.

The legacy debt has been pencilled into the Medium-Term Budget Policy Statement for repayment by the Treasury over the next few years, beginning in 2020/2021.

But lenders want a guarantee confirmation letter of when this will be repaid.

In a letter to affected parties yesterday, business rescue practitioners (BRPs) Les Matuson and Siviwe Dongwana said that on Wednesday a dispute had arisen between the lenders and government over the form of the letter. ' ... the guarantee confirmation letter has not yet been provided to the company therefore we are required to convene the meeting as set out in the business rescue plan,’ they said.

The BRPs also told affected parties that they were satisfied that the condition precedent had been met for government to ‘provide the requisite funding’ to restart SAA and settle various obligations, including to employees.

Last week, notes Business Day, the Ministers of Public Enterprises and Finance provided Matuson and Dongwana with a letter committing to ‘the mobilisation’ of funds for SAA. T

he plan requires R10.1bn in short, medium and long term funding. However, since the letter was provided, Finance Minister Tito Mboweni has made it clear that the R10.1bn will not be paid by the fiscus but that government will seek to mobilise it elsewhere, for instance, from investors or through a share offering.

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