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SA Airways borrows R1.5bn to stay afloat

by Business Reporter
06 May 2013 at 04:26hrs | Views
Johannesburg - SA Airways has postponed its bond issue in favour of borrowing R1.5bn from two banks, it was reported on Monday.

Chief financial officer Wolf Meyer told Business Day this was until the cabinet adopted the airline's turnaround plans.

The R1.5bn was working capital to keep operations running while SAA grappled with high fuel prices and its loss-making, long-haul business in a highly competitive market.

SAA had used a R5bn state guarantee extended to it last year to secure the loan.

"All the legal documents (for the loans) are being finalised and we are waiting for the minister's final approval," Meyer told the newspaper.

"The cash will be available today (Friday) or Monday."

Meyer said SAA had also received a "good rate" on the loans because of the guarantee.

The loans were believed to have been extended by Rand Merchant Bank and Investec, the newspaper reported.

However, Meyer refused to confirm this, and told Business Day only that the loan was split "50-50" between two local banks.

"We require it (the loans) for working capital... this was always our plan to use part of the guarantee to raise money," he was quoted as saying.

SAA would repay the loan once it had gone ahead with its bond issue.

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Source - Finance24