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Brown soothes fears over loans to Eskom, Transnet

Sep 01 2016 19:33

Cape Town - Public Enterprises Minister Lynne Brown on Thursday assured all lenders and investors that Eskom and Transnet are credible and reliable borrowers.

The two state-owned enterprises (SOEs) were part of the six companies that Futuregrowth Asset Management, South Africa's biggest private fixed-income money manager with about R170bn in assets, suspended loans to.

The other SOEs are the SA National Roads Agency (Sanral), Landbank, the Industrial Development Corporation (IDC) and the Development Bank of Southern Africa (DBSA).

Denmark’s Jyske Bank AS became the second money manager to say it won’t lend to Eskom.

Brown said Eskom and Transnet have strong credit fundamentals as evidenced by their respective credit profiles.

"As the Shareholder Representative of Government in these two SOCs, I urge current and potential future investors to directly engage with me and the SOCs about any matter of concern in regard to their investments," said the minister.

“Their performances over the past financial year confirm their strong governance structures including the stable Boards of Directors and Executive Committees," she said.

“I, as Shareholder Representative on behalf of Government, have recently concluded Eskom and Transnet's Annual General Meetings. The Boards have fulfilled successfully their fiduciary duties and both companies had unqualified audit reports. This is a critical indicator for any international or national investor to invest in the future of both companies and in South Africa," she explained.

On Wednesday Futuregrowth expressed concern over the governance and decision-making of certain SOEs amid government infighting over an investigation by the Hawks into Finance Minister Pravin Gordhan.

It was also worried about the sudden announcement that President Jacob Zuma will lead a new panel to oversee SOEs, despite a mechanism in place giving this role to Gordhan and other ministers.

Eskom said in a statement that it will continue to engage with Futuregrowth and the broader investor community to understand recent concerns raised regarding current and future investments into Eskom.

"Local asset managers provide considerable support to the funding of SOEs and the general local bond market," Eskom said.

“As at the end of August 2016, Eskom has available liquidity of approximately R38bn and has secured more than 57% of its borrowing requirement of R69bn for the financial year 2016/17. Consequently, the announcement by Futuregrowth Asset Managers does not place Eskom’s funding plan at risk and I am confident that the funding for the year will be raised,” said Anoj Singh, Eskom’s chief financial officer.

Transnet said it had already funded its full borrowing requirement for the 2016/17 financial year, and that it a "healthy liquidity position" of R22bn.

"Transnet is available to engage with all its lenders and investors, including Futuregrowth, to address any concerns they may have regarding the company’s business activities," it said in statement.

"Land Bank was advised by Futuregrowth on Tuesday, 30th August 2016, of their decision to suspend lending activities to state-owned entities including the Land Bank," the Land Bank said in a statement.

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