Transnet gets R4bn Japanese loan
27 March 2009
South African state transport company Transnet and the Japan Bank for International Cooperation (JBIC) signed a R4-billion loan agreement on Thursday to help fund the company's R80-billion capital investment programme.
The proceeds of the loan will be used to fund the widening and deepening of the entrance to the Durban harbour, one of the strategically significant projects in Transnet's capital programme, the company said in a statement.
The untied loan agreement was signed by Transnet acting group CEO Chris Wells and JBIC's head of finance for Europe, Middle East and Africa, Toshiro Machii.
The project was primarily intended to accommodate larger vessels in Africa's busiest and largest harbour.
The JBIC had leveraged 40% participation of other Japanese financial institutions, including the Bank of Tokyo Mitsubishi UFJ, Mizuho Corporate Bank and Sumitomo Mitsui Banking Corporation in the loan, it said.
The JBIC is the international wing of the Japan Finance Corporation, Japan's policy-based financing institution, which has a mandate to fund projects that support Japanese companies overseas.
Transnet said several Japanese companies used Durban harbour to import or export their products, and the port also served as a gateway to neighbouring countries.
Wells said this was the first of several foreign funding agreements Transnet had in its funding strategy.
"The agreement is in line with our strategy of diversifying our funding sources and raising funds cost-effectively while prudently managing liquidity risks.
"While we continue monitoring developments in the international debt capital markets for windows of opportunity and lower costs, and utilise the already established ECA (export credit agency) umbrella facility for the funding of the imported component of our capital programme, we anticipate that the bulk of the funding will continue to originate from the domestic debt capital markets.
"To this end, Transnet continues to tap its current bonds (TN17, 23 and 27) for R500-million every fortnight," he said.
Transnet had committed to use various funding alternatives including bonds, commercial paper, bank loans, internally generated cash and funding from international Development Finance Institutions (DFIs) to finance its capital investment programme.
The R80 billion five-year capex programme was aimed at revamping and extending Transnet's rail, pipeline and port infrastructure network.
This included buying a significant number of new and "like-new" locomotives for its rail freight division, building and expanding its ports infrastructure, as well as building the new multi-product pipeline between Durban and Gauteng to replace the existing Durban to Johannesburg pipeline, which was now more than 40 years old, and to significantly increase pipeline capacity.
"We are also in talks with similar institutions (DFIs) in other countries and we anticipate that we'll reach agreements in due course," Wells said.
Sapa
