20 April 2009
State-owned logistics group Transnet has secured a R915-million loan from Finland’s export credit agency, Finnvera, to buy equipment for the ports of Durban, Ngqura and Cape Town as part of the company’s five-year, R80-billion capital expenditure programme.
The export credit agency facility, signed by Transnet acting CEO Chris Wells in Durban this week, comprises four separate loans with repayment periods of up to 10 years.
“This is a historic moment for us, as it is the first ECA funding, and marks our foray into tapping international debt capital markets to part-fund our capex programme,” Wells said in a statement this week.
The facility is a landmark transaction for Finnvera, incorporating fixed-rate rand funding for euro-based contracts, significant flexibility on the provision of foreign content cover and a framework to accommodate other contracts going forward.
Wells said the flexibility provided by an alternative source of comparatively-priced financing in the prevailing complex market conditions represented an invaluable tool in implementing the company’s long-term growth strategy.
“We are accessing a deep pool of alternative funding at a price which is comparable to the domestic bond market,” he said.
Wells said that he saw the conclusion of the agreement as a further sign of confidence by investors in Transnet as a well-managed company and an attractive investment proposition. “This shows the bankability of our project portfolio,” he said.
While Transnet was now tapping international debt capital markets, Wells made it clear that the bulk of the funding would continue to be sourced domestically.
“We are well ahead of our plans in raising the required debt funding for the new financial year [starting 1 April]”, Wells said.
The latest agreement follows last month’s announcement that Transnet and the Japan Bank for International Cooperation had signed an historic ¥35-billion (about R4-billion) untied loan agreement.
The proceeds of that loan are being used to fund the widening and deepening of the entrance to the Durban harbour.
SAinfo reporter
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