Durban – Transnet announced this week that it had signed a five-year loan agreement of up to $1.5 billion (just over R25bn), led by Deutsche Bank.
Transnet said on Wednesday that the funds would be used to finance its expansion programme and refinance existing debt, in line with the company’s 2022/2023 outlook.
Transnet will only have to start repaying the loan after 12 months.
According to Transnet spokesperson Ayand Shezi, the loan agreement will also include an “Accordion feature”, which will allow them to borrow a further $800 million.
Besides the German banking house Deutsche Bank, other finance entities that are part of the deal include the African Export-Import Bank, Africa Finance Corporation and Ahli United Bank.
“The first drawdown amounting to $685m is scheduled for July 2022. The facility is also structured to be repaid in eight equal semi-annual instalments after a 12-month grace period,” Transnet said.
Transnet chief financial officer Nonkululeko Dlamini said the loan would go a long way towards sustaining the company’s financial position.
“This is a significant milestone to stabilise Transnet’s liquidity position in support of our financial sustainability. It has been the single most largest funding transaction which Transnet has been able to secure in the past seven years with the benefit of diversifying our investor base in the process.
“The confidence that these investors have demonstrated is encouraging and we continue to focus on improving the operational and financial performance of Transnet,” Dlamini said.
South African economist Professor Bonke Dumisa said that it was good that Transnet had not put out a begging bowl to the government for funds, but had rather secured their own investment.
Dumisa said, however, that attention must be paid to ensure that the funds do not fall into the hands of those seeking to misdirect them or were a part of corrupt dealings.
“This helps avoid a situation where all these SOCs always have to go to the government with begging bowls, and force government to allocate such funds from an already empty budget where the government has already budgeted at least over R400bn for expenditures over and above the budgeted revenues of about R1.2 trillion.
“There must, however, be attention paid to ensuring that none of this money must find itself being misdirected to corruption as some of the submissions at the Zondo Commission showed what happened to Transnet capital expenditures in the past,” Dumisa said.
IOL