1time was drown­ing in debt

NOV 7, 2012 | MPHO SIBANY­ONI BUSI­NESS REPORTER

A BUSI­NESS res­cue spe­cial­ist who was sup­posed to save trou­bled 1Time Air­line has thrown in the towel by fil­ing for the pro­vi­sional liq­ui­da­tion of the low-​cost air­line com­pany as it is drown­ing in debt of about R462-​million.

This is con­tained in court doc­u­ments in which busi­ness res­cue prac­ti­tioner Ger­hardus Holtzhauzen yes­ter­day applied for an urgent order in the Pre­to­ria High Court to have 1Time wound up. The mat­ter will be heard in court today.

The doc­u­ments reveal for the first time the extent of the company’s woes. The court appli­ca­tion comes after 1Time last Fri­day left pas­sen­gers stranded when it announced that it was ceas­ing operations.

The clo­sure was linked to the pulling out of a UK investor, who had planned to inject funds that were needed by 1Time to stay afloat.

In the court papers, Holtzhauzen argues for the wind­ing up of 1Time as the company’s lia­bil­i­ties amount to R462-​million. They include secured debts cost­ing R110-​million, air­craft engine debts of R15-​million and “var­i­ous unse­cured debt of R375-​million”.

The company’s assets total R38-​million. These include 1Time’s immov­able prop­erty that is worth R12-​million, mov­able assets of R3.8-million, air­crafts worth R16.4-million and trade receiv­ables to the amount of R5.5-million.

It is there­fore clear that 1Time’s lia­bil­i­ties exceed its assets by R462-​million and it is clearly insolvent.”

Holtzhauzen pro­posed that the company’s oper­at­ing licence be active until the winding-​up process had been con­cluded. He also argued that 1Time’s busi­ness res­cue plans should be discontinued.

He fin­gers paras­tatal Air­ports Com­pany of South Africa (Acsa) of allegedly kick­ing 1Time when it was down. He said that on August 21, Acsa started requir­ing 1Time, due to its his­tor­i­cal finan­cial dif­fi­cul­ties, to only make pay­ment electronically.

Acsa also told 1Time to start pay­ing debt the com­pany would incur over week­ends and pub­lic hol­i­days in advance.

I con­firm that the afore­said change in Acsa’s pol­icy placed addi­tional con­straints on the 1Time cash-​flow over and above the other chal­lenges the com­pany faced,” he said.

Blacky Komane, the CEO of 1Time, refused to com­ment, say­ing he would wait until the court had made its decision.

Holtzhauzen added that 1Time needed between R60-​million and R80-​million and also to con­duct debt equity swaps for the busi­ness res­cue to be suc­cess­ful. “These two ini­tia­tives would have recap­i­talised the bal­ance sheet of the com­pany into a sol­vent posi­tion,” he said.

He said 1Time share­hold­ers and cred­i­tors were reluc­tant to imple­ment the pro­pos­als as Acsa’s posi­tion on the busi­ness res­cue was uncertain.

Holtzhauzen said he attended a meet­ing with 1Time direc­tors last week Fri­day, in which he informed them that there was no prospect to save the com­pany, and oper­a­tions should be sus­pended by midnight.

To sur­vive last week­end, 1Time needed R3.4-million. Obtain­ing the short-​term loan from cred­i­tors proved unsuccessful.

He said a UK investor on Mon­day for­mally expressed renewed inter­est in acquir­ing 1Time. “Unfor­tu­nately for var­i­ous rea­sons . this pos­si­bil­ity can­not be fur­ther explored under the busi­ness res­cue pro­ce­dure due to 1Time’s com­mer­cial and fac­tual insol­vency,” he said.

Holtzhauzen said delays while 1Time is grounded and not oper­a­tional will “most cer­tainly influ­ence any good­will that may be left in its busi­ness and it is of the utmost impor­tance that the liq­ui­da­tion order be granted as a mat­ter of urgency”.

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