News in South Africa 11th May:
1. More trouble for SAA:
In the absence of a business rescue plan, the issuing of Section 189 notices commencing a consultation process over proposed retrenchments at South African Airways was procedurally unfair, the Labour Court found on Friday.
SAA and its business rescue practitioners are, therefore, instructed to withdraw these notices. The order states, however, that nothing precludes them from offering, nor any employee of SAA from accepting, any offer of voluntary retrenchment, Judge Andre van Niekerk ruled.
On Thursday, the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) challenged the Section 189 retrenchment process initiated by the practitioners in March.
On Thursday evening the practitioners announced that, in order to make the appropriate decisions depending on what the Labour Court ruling, they have extend the deadlines for unions and individual employees to sign the proposed voluntary termination of employment agreement yet again.
2. Vodacom reports profits:
This morning, Vodacom reported a 9% increase in headline profit. In South Africa, sharp data price reductions led to a steady increase in data traffic over recent months.
3. Reserve Bank buys bonds:
The Reserve Bank bought R11.4 billion worth of government bonds during April, as part of its measures to introduce liquidity to the market.
In March, the bank only bought R1 billion bonds.
This is part of the raft of measures the Reserve Bank announced on 25 March, to deal with the dysfunction in the market brought on by the coronavirus pandemic, which triggered a mass sell-off in emerging market equities and currencies as investors flocked to safe havens.
“During times when there is a lack of liquidity in the SA bond or capital market, they [the Reserve Bank] step in and provide some liquidity,” said Chief Economist of the Bureau for Economic Research, Hugo Pienaar. This is not to influence bond yields, but to ensure the “smooth functioning” of the bond market during these exceptional times, he added.
The bank’s statement on assets and liabilities for April, released on Friday, shows that the bank now has over R20.65 billion worth of government bonds.
4. Horse racing group receives cash injection:
SA’s largest horse racing group, Phumelela Gaming & Leisure, is to receive a cash injection from the Oppenheimer family, averting what might have been the demise of the sport in the country after the company filed for business rescue on Friday.
The group, which among others operates the Vaal racecourse, is believed to have a fighting chance to survive the business rescue process after a post-commencement loan agreement was offered by family office Mary Oppenheimer Daughters.
5. Denel unable to make payments:
South African state-owned defence firm Denel is unable to make payments to its employee pension fund or meet some of its tax obligations as it struggles with a liquidity crunch, its chief executive wrote in a letter seen by Reuters on Friday.
Denel is one of a number of loss-making state-owned enterprises the government had been keeping afloat with bailouts but which are now being battered by the coronavirus pandemic and a nationwide lockdown aimed at preventing the disease’s spread.
“We still managed to pay the base salary for the month of April, whilst highlighting that the following months may still pose some significant financial challenges,” Danie du Toit wrote in a letter to company staff dated May 6.
The company, which makes military hardware for the South African armed forces and exports to clients around the world, was technically insolvent before the government injected 1.8 billion rand ($98 million) in August.