SAA Cancels Contract With Financial Adviser BnP

South African Airways has ended its contract with BnP Capital, a financial advisory firm hired for the company's restructuring of ZAR15 billion rand (USD$1 billion) of debt.

Earlier this month, SAA said it had put that deal on hold to review the award of the contract to BnP Capital.

"After considering all relevant information received from BnP Capital, SAA management took a decision to terminate all BnP services to the airline as a prospective financial service provider in relation to SAA's initiative on debt consolidation," SAA said in a statement.

SAA did not elaborate on the information received from BnP Capital following the state airline's enquiries.

"No payments had been made to BnP Capital. The decision to terminate the service was arrived at after a review of the award to BnP Capital," SAA said.

Local media reported this month the SAA board went against the advice of its own treasury by agreeing to pay BnP Capital a ZAR256 million rand success fee to advise it on debt restructuring and fund raising without putting the contract out to tender.

The contract was awarded without tender due to urgent loan repayments due at the end of June, SAA said.

SAA appointed BnP Capital as transactional advisor in March, SAA said, adding that it issued a letter of award to the financial provider to source funds on behalf of the airline in May in light of a sudden withdrawal by a potential lender.

SAA has been sustained by state guarantees of around ZAR14.4 billion rand and has asked for an additional ZAR5 billion rand from the Treasury.