AirZim courts van Hoog

via AirZim courts van Hoog | The Financial Gazette by Shame Makoshori 31 Oct 2013

AIR ZIMBABWE (AirZim) has begun discussions with the tough-talking multi-millionaire investor, Nicholas van Hoogstraten, which could see the British tycoon availing an undisclosed sum to the beleaguered national flag carrier for aircraft acquisitions and repayment of massive debts in Europe sources have revealed.The move is meant to facilitate the re-launch of flights on the money-spinning Harare-London route next month.

Government sources familiar with the discussions told The Financial Gazette’s Companies & Markets (C&M) this week that the property magnate, a significant shareholder alongside government in Zimbabwe Stock Exchange-listed Hwange Colliery Company Limited and listed-hotel chain, Rainbow Tourism Group, had agreed to a proposed deal by AirZim but had tabled several conditions, which the AirZim board was still considering.

If the board, and consequently government, which wholly-owns Air Zimbabwe, agrees to the deal with van Hoogstraten, the British tycoon is understood to be ready to immediately inject up to US$15 million in working capital for the resumption of the Harare-London flights. AirZim chairman, Ozias Bvute told C&M on Monday that he had not received van Hoogstraten’s proposal.

But C&M understands that the tycoon will get a 180-day commercial paper after injecting the funding.

AirZim is expected to deploy the cash to settle an overdraft facility estimated at about US$$2,5 million and channel at least US$3 million towards unpaid landing debts in London, a source familiar with the transaction said.

An executive at a bank that is handling the transaction said AirZim would use about US$500 000 to rehabilitate and carry maintenance work on one of its Boeing 767s that is currently grounded.

C&M can exclusively reveal that after the maintenance works, the B767 would be leased for about US$500 000 per month to generate funding for critical overheads. At least US$1 million would be channelled into working capital, while a further US$3 million would fund fuel procurement.

Van Hoogstraten has also agreed to purchase two new Boeing 777 aircraft for the Harare-London flights and proposed that AirZim reconfigures the route to include Johannesburg, reliable government and AirZim sources said. But the Bvute-led board would have to agree to conditions proposed by van Hoogstraten, which include the formation of a new company in London, fully controlled by the British businessman that will manage the flights.

Van Hoogstraten has over the years lent to several Zimbabwean companies desperate for cash to fund operations under a hard currency regime adopted in 2009 after the country ditched its worthless currency.
“He has said he is ready to roll in the capital, but has demanded that the recipients fully account for each and every cent invested,” a source said.
Last week, C&M reported that van Hoogstraten had tabled a US$50 million bailout package for struggling coal miner, Hwange Colliery, but had demanded a raft of reforms likely to hand him management control. Hwange has been battling a US$20 million negative working capital deficit following years of under-capitalisation.

Last week, Wilbough’s Consolidated, which is one of the investor’s family businesses, wrote to the Hwange board, in a letter that was copied to the Minister of Mines and Mining Development, Walter Chidhakwa, and President Robert Mugabe, indicating that it was ready to inject fresh capital into the mine but proposed wide-ranging conditions, including taking over management control, before releasing US$50 million.
Under the proposed transaction, Wilbough’s wants a five-year technical services and management agreement with Hwange.
Commenting on the AirZim deal, a source said; “Van Hoogstraten has agreed to pay US$8 million in outstanding overflying debts, which are critical if the airline is to be allowed to land in London.”
“He says if the AirZim board agrees, he will buy two B777s for the Harare-Johannesburg-London routes. But he wants total control of management and finance.
“He wants to make sure that on every flight there are no free tickets, which he feels have been killing the airline.” Van Hoogstraten declined to comment on the deal this when contacted during his visit to the country last week.

The 300 to 370 seater B777 is one of the largest twin-engine airliners in the world, spanning the capacity between the B767 and the B747.
Van Hoogstraten feels it would be the best aircraft for the Harare-London route.
AirZim, which has 767s in its fleet, which can be used for the Harare-London flights, has been trying to introduce a fresh taste on its routes, after the recent lease of two A320s from France, which have been flying on its regional routes since the airline re-launched flights in November last year.
It had grounded its entire fleet in July 2011 after encountering working capital constraints.

The airline’s board has been looking at the possibility of leasing Airbus 330s (A330) to use on the route, where competition is cutthroat, and only latest aircraft ranges are likely to attract viable traffic.
In addition to local flights, AirZim has been operating the Harare-Johannesburg and Victoria Falls-Johannesburg flights.
During the United Nations World Tourism Organisation’s annual general meeting in August, the airline had indicated that it would introduce three more routes in southern Africa starting this month.
This did not happen.

AirZim had indicated that it had completed research on the viability of two weekly flights on the Harare-Durban route and three weekly flights on the Harare-Lusaka and Harare-Lilongwe routes.
AirZim, which collapsed under the weight of massive debt and depleted passenger numbers in 2011, has been on an aggressive domestic and regional route network expansion since bouncing back in November last year.

 

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9 comments on “AirZim courts van Hoog
  1. SADC says:

    They guy Van Hoog is a lunatic but he is business minded. His thinking is good and currently sounds like the best thing for airzim. As long as he makes a profit so does airzim, and Zimbabwe as well. But on the idea of him affording two 777 well? But the Harare-Johanessburg-London is a fantastic proposal.

  2. MikeH says:

    Air Zimbabwe is permanently off the menu as far as I am concerned.

  3. Bob says:

    Zvavakutoda mavheti ka izvi, isnt?

  4. Mike Patterson says:

    The precondition that no free flights will be considered will discount Mr Van from the deal. Mugabe and his cronies need the free flights for their shopping trips.

  5. Chivulamapoti says:

    Mugarbage will NEVER fly AirVanHoog, it’s too dangerous. Anyway Air ZingZong and it’s ‘private’ jets are less costly, actually FREE!

  6. Haruna says:

    Why not look east my ass.

  7. Johnny k says:

    With the twin problems of investment and indigenisation, it appears that the govt is quite happy to look that other way when the investor is friendly to ZANU. I suppose if Van Hoog gets control of Hwange or Airzim then he must be classified as indigenous?? Likewise Billy Rautenbach can get compulsory blending of his ethanol produced by his company Green Fuels for all fuels so he must also be Indigenous, The fact that both these scoundrels are international criminals does not matter to ZANU so long as they cough up their bribes.

  8. Phidza says:

    Good deal thats the best option so far for Air Zimbabwe Nick is business minded. B777 and new routes means returning of all employees on leave and creation of more jobs well done.

  9. Jake says:

    Think of this one – Air Van Hoog being told that one 777 is needed for 10 days for a trip to Singapore, for a party of 85. Will he ask if they will be paying for the tickets?

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