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South African Airways (SOC) Ltd

Request for Information for possible

management outsourcing and business

partnership/ownership models with SAA

on Air Chefs (SOC) Ltd

RFI-GSM074/15

REQUEST FOR INFORMATION

Instructions on Completion of Request for Information Document.

Sections 2 are to be completed by the proposer.

SAA will be glad to accept any information you can offer on the option/s as stated.

This request for information must be completed in English and the offers must be stated in South African Rand.

This information request does not obligate SAA or Air Chefs in any form and we reserve our rights.

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Table of Contents

1. Background 4

1.1. About Air Chefs 4

2. Purpose of the RFI 5

3 Request for Information (RFI) 6

3. Provision of information 14

4. Structure of responses 15

5. Participation requirements 17

5.1. Enquiries and perusal of information 17

5.2. Closing date and time 17

5.3. Method and place of submission 17

5.4. Condition of award 18

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SECTION 1: REQUEST FOR INFORMATION DETAILS

1. Background

1.1. About Air Chefs

Air Chefs SOC Ltd (“Air Chefs”) is a wholly-owned catering and allied service subsidiary of

South African Airways SOC Ltd (“SAA”), formed in 1986 through a Joint Venture between

Transnet (51%) and Fedics Strategic Investments (49%). In 2002 SAA, a fully State Owned

entity and also the primary client airline, acquired the stake held by Fedics. Air Chefs currently

services five Airlines within the domestic and regional markets.

In response to changing market conditions which eroded its profitability, Air Chefs has

implemented a turnaround strategy which is expected to return the company to profitability. Part

of the plan is to consider strategic partnerships with other in-flight catering and non-in-flight

catering companies, thereby diversifying the business of Air Chefs to accelerate the

improvement of its profitability (through growth and new business) and maintain and enhance

operational excellence.

Air Chefs’ vision is to be Africa’s Leading World Class Catering Company and its mission is to

deliver commercially sustainable catering services in South Africa and Africa. Air Chefs has the

following values:-

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ACCOUNTABILITY – taking ownership for the role in the organisation, and accepting

the consequences of our performance.

INTEGRITY – adhering to high moral principles and professional standards at all times.

RESPECT – for each other- consideration, thoughtfulness and respect to our fellow

colleagues.

CUSTOMER FOCUS- considering the customer first in all that we do.

HONESTY – being fair, truthful and morally upright

EMPLOYEES- putting our people first

FOOD THAT DELIGHTS – Excellence in both menu design and food quality

SAFETY & SECURITY – Adopting a zero defect mentality towards safety and security

and striving for zero incidents through proper training, work practices, risk management

and adherence to safety, health, environmental, security and quality regulations at all

times.

2. Purpose of the RFI

SAA is considering management outsourcing or business partnering options to diversify its

exposure in Air Chefs while ensuring the continued operations and growth of the Air Chefs

business.

The purpose of this RFI process is to establish the nature and extent of the appetite from the

market to engage in the outsourcing of the management of Air Chefs or business partnership

with SAA, in the Air Chefs business, that allows SAA to meet its key strategic objectives which

are :-

Guarantee security of supply

Re-capitalisation of Air Chefs for capital and operational expenditure

Sales/ Revenue growth of Air Chefs through access to different markets and / or

complementary customer segments and/ or service lines

Internal efficiency/Operational restructuring of Air Chefs (Expedite turnaround)

Continued contribution to the Government’s National developmental objectives

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SAA may also consider a possible complete divestment of Air Chefs without forgoing the above

objectives

3 Request for Information (RFI)

SAA has through its own investigation of the market identified the following business

partnership models:-

1. Management Agreement

2. Joint Ventures

3. Strategic Equity Partnership (part sale of Air Chefs’ equity)

4. Full sale of Air Chefs’ equity

Interested parties are hereby invited to submit proposals on how they intend collaborating with

Air Chefs. The options listed above are not exhaustive and interested parties are free to

propose other models which will achieve the objectives set out in 2 above.

The respondents to the RFI must meet and demonstrate the following minimum qualifying

criteria:-

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Business partnership model

Financial Market/industry Socio-economic Other

Qualifying criteria

common to all options

(except Management

Agreement)

Balance Sheet

o Minimum liquid

assets of R100m

and/ or

o Minimum debt

facility of R100m or

o Demonstrate that

capital of not less

than R100m can

be raised.

Respondents must be

willing to invest capital

in Air Chefs in any form

of instruments available

at its disposal

Or must be able to

demonstrate its

ability to raise

capital for this

transaction

Although responses

for all lines of

business are

welcomed, preference

will be given to

businesses in the

airline catering,

events, restaurants,

hospitality, FMCG and

logistics sectors

If not in the above

sectors, strong

consideration will be

given to responses

that clearly shows

innovation regarding

the Air Chefs

business model and/

or complementary

nature and synergies

of business

Respondents must be

prepared to comply

with B-BBEE

legislation if selected

as a partner

Respondents must

provide a

transformation plan to

achieve

developmental

objectives such as

ownership by the

previously

disadvantaged

Respondents must

comply with section

197 of the Labour

Relations Act (LRA)

as amended

Respondents must not

have any convictions or

penalties for non-

compliance with legislation

and regulation in South

Africa or abroad (e.g. tax,

competition, collusion etc)

Business partnership model

Financial Market/industry Socio-economic Other

Qualifying criteria

specific to Strategic

Equity Partnership

(partial divestment)

Respondents must

indicate if there is

willingness for equity

participation for Air Chefs’

current management

(This is a non-mandatory requirement)

Respondents must have

more than 5 years’

experience in the current

line of business will be

advantageous but will not

be disqualified

Respondents must be

able to provide specialist

management expertise in

current line of business as

an advantage

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Qualifying criteria

specific for Joint

Ventures

Respondents must be

able to demonstrate

ability to grow the Air

Chefs business (e.g.

international, general

catering)

Respondents must have a

minimum of 3 years’

experience in their current

line of business

Respondents must be

able to provide specialist

management expertise in

current line of business as

an advantage

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Divestment (whole) Potential partners should

indicate how they will

deal with the following:-

oProvide SAA with

competitive pricing

oEnsure and provide

continuous

assurance that Air

Chefs is not asset

stripped

oHow they intend

capitalising Air Chefs

or

oAllow SAA to access

competitive market

Respondents must

indicate if there is

willingness for equity

participation for Air

Chefs’ current

management (This is a non-mandatory requirement)

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Qualifying criteria

Management

Agreement

That they have led and

managed turnarounds

of businesses with a

revenue of more than

R300 million.

Although responses

for all lines of

business are

welcomed,

preference will be

given to businesses

in the airline catering,

restaurants, events,

hospitality, FMCG

and logistics sectors

If not in the above

sectors, strong

consideration will be

given to responses

that clearly shows

innovation regarding

the Air Chefs

business model and/

or complementary

nature and synergies

of business

Respondents must be

prepared to comply

with B-BBEE

legislation

Respondents must not have

any convictions or penalties for

non- compliance with

legislation and regulation in

South Africa or abroad (e.g.

tax, competition, collusion etc)

A plan must be submitted on

how to expedite the company

turnaround with clear

timelines. The following must

be addressed in the plan:

o The time required

to assess the

current business

status.

o Clear plan with

timelines by when

the turnaround will

be achieved with

clear net profit

targets. The plan

should specify a list

of strategic

priorities for

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implementation.

o An assessment of

the current

turnaround

initiatives and

additional initiatives

identified. Current

initiatives to be

validated (Savings

or improvements

through current

identified initiatives

will not be

considered as part

of the proposal).

o Revenue

enhancement

initiatives with clear

deliverables.

Due to the company’s financial

position only proposals that will

not attract additional cost to

SAA and Air Chefs will be

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considered.

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3. Provision of information

Interested parties will be provided with an Information Pack detailing the current state of the

company upon signature of a non-disclosure agreement. Please note that the information in the

pack may be limited to protect Air Chefs confidential and private information. All information

considered confidential and private by Air Chefs will not be disclosed for purposes of proposals

under this RFI.

Information type Documents

Financials Previous 3 year summarised financial statements

(including headcount)

Marketing Basic marketing documents

4. Structure of responses

Interested Parties must clearly demonstrate and address all of the above qualifying

criteria. Responses must be clearly marked with the proposed partnership model. A

separate submission as required in Part B must be made if proposing more than one

business partnership model.

The structure of the responses should be as followings:-

Part A: Provide information regarding the respondents details

Business profile that includes but is not limited to the following:

Name of respondent

Indication of headcount

Services/ Goods provided by the respondent

Markets and industry/ sectors currently being serviced by the respondent

Annual revenues of the respondent

Existing strategic relationships of the respondent

Other interesting facts such as company growth, awards won, innovation

achieved, etc.

Part B: Provide information regarding the proposed business partnership model

Business Partnership proposed:

Nature of the partnership (Joint Venture, Strategic Equity Partnership, Acquisition ,

Management agreement and/ or other (Please explain in detail if proposing other)

Legal structure envisaged

Length of the partnership

Ownership proposal if applicable (indicate revenues and/ or profit splits if not

proposing acquisition)

Description of the business strategy envisaged for the partnership:

Markets and revenues that will accrue,

Operational and Capital costs envisaged,

Strategic and operational risk envisaged and proposed mitigation strategies

Business operating model proposed (where applicable)

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· Governance,

· Management,

· Marketing and Sales e.g. marketing strategy and sales channels,

· Service delivery e.g. production, logistics and other

· Support e.g. Human Resources (HR), Information Technology (IT) and

other

Estimate the net benefits of the partnership model (and indicate the share splits if

proposing joint venture and/or Strategic Equity Partnership or Management

Agreement)

State what the respondent will expect from SAA – kindly provide details

State potential envisaged investment (capital, operational, loans – please indicate

details for the loans such as size, repayment terms, costs, repayment period etc.)

into Air Chefs that will be made by the respondent

For management agreement the following must be addressed in the response:

1. The time required to assess the current business status.

2. Clear plan with timelines by when the turnaround will be achieved with

clear net profit targets. The plan should specify a list of strategic priorities

for implementation.

3. An assessment of the current turnaround initiatives and additional

initiatives identified. Current initiatives to be validated (Savings or

improvements through current initiatives will not be considered as part of

the proposal).

4. Revenue enhancement initiatives with clear deliverables.

Part C: Demonstrate how the respondent meets the minimum qualifying criteria as described in section 3 of this document

Financial (demonstrate qualifying criteria)

Market and Industry (demonstrate qualifying criteria)

Socio Economic including the criteria relating to ownership and B-BBEE as set out

above (demonstrate qualifying criteria)

Other (demonstrate qualifying criteria and any other relevant information to

strengthen the case)

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5. Participation requirements

5.1. Enquiries and perusal of information

Information related to Air Chefs will be supplied in the Information Pack. All other

questions and requests for further information must be sent by e-mail to

[email protected] before 12 February 2016

5.2. Closing date and time

Time: 11:00 South African Time (GMT+2.00)

Date: 16 February 2016

5.3. Method and place of submission

Submissions must be deposited in the tender box situated at the address below. Two (2)

copies and the original must to be submitted.

Alternatively, an electronic copy of the submission can be sent by email to

[email protected] on or before the above mentioned date and time.

Submission address:

Main Reception Gate

SAA Airways Park Jones Road

OR Tambo International Airport

Kempton Park

1627

5.4. Condition of award

NB: No award will be made following this RFI process; however the subsequent request for Proposals (RFP) will be confined to the RFI respondents from which an award may be made.

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mailto:[email protected]

SECTION 2: SUPPLIER INFORMATION

(To be completed by Supplier)

Supplier Information

2.1) Name of company: ____________________________

2.2) Company registration number: ________________________2.3) Address of company:

Postal Address: Street Address:

___________________________ ______________________________________________________ ___________________________________________________+___ ___________________________

Company’s internet address:-

2.4) Contact person:

Name: _________________________

Designation: _________________________

Telephone number: _________________________

Fax number: _________________________

2.5) Names of the directors of your company:

Name: Designation:

__________________________ ______________________________

__________________________ ______________________________

2.6) Total number of Employees: ______________________

2.7) Declaration:

The information supplied in this document is correct and complete to the best of my knowledge and accurately reflects the capability of:

(Company name) ___________________

Signature: ________________________ Date:_____________________

Name: ________________________

This RFI is signed in my capacity as: _____________________________________

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SECTION 3: TERMS AND CONDITIONS

(To be read very carefully by supplier)

Standard conditions for Request for Information

1. INTERPRETATION AND DEFINTIONS

1.1 Definitions

The expressions defined below shall have the meanings hereby assigned to

them unless inconsistent with the context of a particular proposal, agreement,

contract or order.

1.1.1 “Company”: South African Airways (SOC) Ltd

1.1.2 “Closing date”: the date and hour specified in the document

2. REQUEST FOR INFORMATION INVITATION

2.1 Request for Information Preparation

All costs in the preparation, presentation and demonstration will be for the

account of the vendor. All supporting documentation and manuals submitted

in response to this request for information will become “company’s” property

unless otherwise stated by the vendor at the time of submission.

2.2 Confidentiality

The information obtained through this request for information will be regarded

as confidential; however, South African Airways (SOC) Ltd does not accept

liability for any information which may become public.

2.3 No binding Agreement

It must be clearly understood that no business will be awarded to any vendor

out of this request for information. Prices submitted with the request for

information are for information only and no vendor will be held to any price

submitted. South African Airways (SOC) Ltd further reserves the right to

contact individual Vendor’s to obtain further information should this be

deemed necessary.

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Responses from this RFI may be used to pre-screen potential bidders for the

RFP process.

2.4 Samples

Vendors may, as part of their response, submit samples, brochures or

documentation of the products supplied by the vendor. Samples, brochures

and documentation submitted will be returned to the vendor only on request.

3. REQUEST FOR INFORMATION DOCUMENTS

3.1 Document requiring completion and return

Vendor’s must complete and submit the following documents as part of their

response:

a) Prescribed request for information documents

b) Any information required in the request for information

3.2 Amendment of documents by South African Airways (SOC) Ltd

South African Airways (SOC) Ltd may, at any time prior to the deadline for

lodging the request for information, amend the documents or extend the time

for lodging documents by notice in writing to the prospective Vendors. (Any

amendments under this clause will become part of the request for

information).

4. PREPARATION OF REQUEST FOR INFORMATION

4.1 Language of document

The request for information and all correspondence and documents related to

the request for information exchanged by the vendor and South African

Airways (SOC) Ltd shall be written in English.

5. SUBMISSION OF REQUESTS FOR INFORMATION

5.1 Address and marking of requests for information

All requests for information must be:

a) Enclosed in a plain envelope or wrapping and clearly marked with the

request for information number specified on the document.

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b) Lodged so as to ensure that they are received not later that the closing

time and date specified for their receipt in accordance with directives

issued with the document.

5.2 Number of copies required

The vendor must submit 2 copies and a soft copy (disc or memory stick).

(Including the original) of each request for information lodged as specified in

the request for information.

5.3 Closing date

All requests for information close on the date and the time indicated in the

document.

5.4 Late tenders

Request for information are late if they are received at the address indicated

in the document after closing time and date. South African Airways (SOC) Ltd

may, at its discretion, consider or refuse to consider any late request for

information.

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