[miningmx.com] – TRANSNET, the South African transport and logistics utility, has raised R12bn from a club of South African banks and investors – enough to finance the lionshare of its 1,064-strong locomotive fleet acquisition programme.
All in all, the company has raised R46bn for new locomotives to date of which $1.5bn (R21bn) was through a loan facility agreed with China Development Bank (CDB) in June this year. The company has an option to increase the CDB facility to $2.5bn (R35bn).
Participants in the R12bn loan unveiled today are Absa, Nebank and Bank of China which contributed R3bn of the loan each. Futuregrowth Asset Managers and Old Mutual Specialised Finance contributed a further R1.5bn each.
“All the funders agreed a term of 15 years at competitive rates, including a grace period of four and a half years, while the locomotives are under construction,” said Transnet in a statement. “This is in keeping with the company’s approved funding strategy aimed at achieving a desired match between long-term debt and assets,” it added.
The locomotive fleet acquisition programme is part of its Market Demand Strategy (MDS) that was first unveiled by the country’s president, Jacob Zuma, in 2012 with an initial capital expenditure target of just over R300bn.
Transnet acting CEO, Siyabonga Gama, said on October 29 at the group’s interim results announcement that it would spend up to R380bn in 10 years in terms of updated MDS targets, an effort that would double the size of the company.
“We hope to double the size of the company in six years,” said Gama at the transport and logistics group’s interim results announcement. “We will spend R340bn to R380bn in next 10 year period,” he said. Total assets increased to R350bn in the six months ended September from R328bn at the halfway point in 2014.
If completed, Transnet will have injected half a trillion rands into the South African economy but the strains of the current commodity slump was having an effect on MDS with some projects, including its Waterberg coal plans, being deferred.
“We will make investments in line with what market requires,” said Gama. “Our view is that some of these investments inside that period may be deferred, but when you defer something it does not mean you have stopped,” he said.
In terms of the R46bn raised for locomotives, other funders are Export Development Canada which has loaned just under R7bn, KFW Development Bank (R2,8bn), and US Exim which has guaranteed a loan of R6bn that was financed by Absa, Standard Bank and Old Mutual Specialised Finance.
In a separate announcement, Eskom said it had raised €150m (R2.3bn) in a facility from Agence Française de Developpement (AFD) which will be used to finance Eskom’s Distribution Projects in the KwaZulu-Natal, Eastern Cape and Limpopo provinces.
The facility is for 25 years – including a five-year grace period and 20 years of capital repayment – and will finance investments for grid strengthening, refurbishment, reliability improvements, minor reticulations, split metering and upstream grid reinforcement to cater for renewable energy, the company said.
