Transnet signs R2.2bn French loan

Cape Town - Transnet has received a €200m (R2.2bn) fixed interest loan from the French Development Agency Agence Française de Développement (AFD), to part fund the R4.6bn upgrade to Cape Town harbour's container terminal.

The loan is AFD's largest in sub-Saharan Africa, and has a 12-year draw down period. Although untied, the loan is specifically for the expansion of Cape Town port's container terminal. The aim is to increase its capacity to 1.4 million twenty-foot equivalent units per year by 2012.

Transnet acting CEO Chris Wells explained the AFD loan was part of the drive to diversify funding sources for Transnet's R80bn infrastructure investment programme over the next five years. While 65% of the total project will be paid for by Transnet, the remaining portion will be financed.

Wells described the loan as a vote of confidence in Transnet's sound management and said it was "testimony to the attractiveness and bankability" of all the infrastructure projects the parastatal is undertaking.

Wells confirmed that the state-owned company has managed to raise 90% (R13bn) of the funding required for this financial year.

"The funding strategy is one of the key success stories of the new Transnet. Since returning to the debt capital markets over a year ago, the company, which is self-funding and borrows on the strength of its balance sheet, has launched a series of funding initiatives.

Future cooperation hopes

"This includes bonds and commercial paper under the R30bn domestic medium-term note programme, bank loans and latterly export credit agency funding," said Wells. He also confirmed that Transnet would launch its global medium-term note programme to enable the company to raise bonds in Europe and the US next month.

AFD CEO Jean-Michel Severino said Transnet was managed to the "best of international standards" and had exciting investment plans, in which the AFD hoped to participate.

He confirmed the AFD was speaking to other South African development agencies and parastatals, including the Airports Company of South Africa, which would borrow €85m to pay for renovations at OR Tambo International airport.

Severino said the South African government itself has always been reluctant to take loans from "animals like us", but that the AFD was open to doing business with the state if it were willing.

Meanwhile, the AFD's loan to Transnet will be used to deepen the port's entrance channel and basin, refurbish berths, replace the container handling equipment and acquire new equipment. It also involves reconfiguration of onshore areas to provide additional stack capacity and improve land access.

- Fin24.com