Wednesday, July 17, 2024

South Africa: Transnet Granted National Treasury Support Package

Ports and freight rail company Transnet has been issued an immediate R47 billion guarantee facility by National Treasury in support of the company’s recovery plan and to meet the state-owned entity’s immediate debt obligations.

This was announced in a joint statement by National Treasury and the Department of Public Enterprises.

“The financial support package provided for the entity is a R47 billion guarantee facility against which Transnet will drawdown an initial amount of R22.8 billion to deal with immediate liquidity matters such as settling maturity debt.

“Government has not considered an equity injection given that the budget for 2023/24 is closed and is confident that this guarantee facility alongside swift implementation of the Transnet Recovery Plan will be sufficient to resolve Transnet’s challenges.

“A Guarantee Framework Agreement between the National Treasury, Department of Public Enterprises, and Transnet will include strict guarantee conditions that will be continuously reviewed and amended when deemed necessary. Any further drawdowns will be subject to Transnet meeting these conditions,” the statement read.

The guarantee framework agreement must be concluded between the three parties within 14 days to “ensure that any fiscal risks are mitigated and that the conditions of the facility are fully agreed to by all parties”.

“In addition, National Treasury will continue to work with Transnet to pursue other initiatives to revive its operations and financial viability.

“Transnet [is] to explore further the divestment of non-core assets, reduction of the current cost structure, alternative funding models for infrastructure and maintenance requirements. The latter includes but is not limited to project finance, third party access, concessions, and joint ventures,” the statement said.