Low cost carrier (LCC) Mango Airlines is positioning itself for potential investment that could come as soon as March of next year, according to business rescue practitioner Sipho Sono.
The troubled airline, has invited expressions of interest (EOI) from potential investors by December 20 this year with respondents required to conclude a non-disclosure agreement and provide the requisite proof of financial and operational capacity.
The closing date for bids is 15 00Z on December 20, 2021 and 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.
“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,” said Sipho Sono in an update to creditors.
The plan to sell off the subsidiary to a new strategic equity partner was tabled even as the company’s sole shareholder South African Airways adopted an amended business rescue plan on December 2 as reported by CH-Aviation.
A business rescue plan published on October 29, 2021, suggested that the airline should seek private investment as its parent company SAA was not in a position to allocate more funds as reported by business rescue practitioner Sipho Sono of consultancy SNG Grant Thornton, advised on October 6 by SAA.
The business rescue plan also provided that Mango Airlines resume flight operations in December 2021 as well as seek an investor option or, alternatively the company should be wound down.
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.
Additionally, 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.
