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6 March 2003
The Standard Bank group has established itself as a leading player in the provision of finance to South African Airways (SAA).
It has become the first South African bank to fund all the debt of a wide-bodied aircraft. Standard Corporate and Merchant Bank (SCMB) Structured Finance Division has provided long-term funding for SAA's purchase of an Airbus A340-600 aircraft, worth over R1 billion.
Tri-Linear, a specialised black empowerment finance company, partnered SCMB in structuring the deal.
This is SAA's third A340-600. International banks funded the other two. The aircraft (ZS-SNC) arrived at Johannesburg International Airport earlier this week.
In addition, SCMB has also acted as SAA's advisor in its recent purchase of a 49 per cent stake and investment in Tanzania's national carrier Air Tanzania Company Limited for US$20 million.
The A340-600s replace SAA's Boeing 747s, which the airline has used since 1971. Standard Bank has over the past 10 years participated in a number of syndicated deals that financed these aircraft.
SAA will become the first airline in Africa to operate the ultra-long range, high capacity aircraft. The A340-600 will enable SAA to operate direct non-stop flights over distances of 14 000km. This will significantly enhance SAA's competitiveness.
Says David Munro, Director SCMB Project and Structured Finance; "It gives us great pleasure to share SAA's vision as it builds its business, both locally and internationally. The financing of the A340-600 is a landmark deal for a South African bank in the aerospace industry. It represents another example of Standard Bank going the extra mile to support its clients in an extremely tough and volatile global market, following the events of September 11 and the current instability in the Middle East.
"It is an asset-based commercial transaction that did not require any government credit enhancement. This is significant as it reflects the faith that international players have in South Africa and in SAA."
Says Richard Forson, SAA Chief Financial Officer and Executive Vice President, Finance: "We are extremely pleased with the transaction and hope to continue our relationship with SCMB and Tri-Linear well into the future."
SCMB Corporate Finance Division were appointed as the lead merchant bank in SAA's recent successful bid for a 49 per cent share in Air Tanzania. SizweNtsaluba VSP Corporate Finance were joint transaction advisors on the deal.
The deal is part of the Tanzanian government's initiative to privatise national assets. SAA were among a group of bidders for the stake.
Says Joubert van Wyk, Director SCMB Corporate Finance: "This deal was extremely significant for us as it forms part of Standard Bank's vision of providing investment banking services to South African companies wanting to enter the African market or wishing to expand their African operations. We understand the risks and business environments given our position in and commitment to Africa."
He says SCMB Corporate Finance has a dedicated team of specialists who focus on providing corporate advisory services to companies wishing to transact in Africa. They specialise in mergers and acquisitions, valuations and privatisations.
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