Transnet secures R6bn funding from US credit agency

2014-08-06 17:40

Transport utility Transnet has secured a R6 billion funding guarantee for the locomotives it is buying from General Electric.

“Transnet has secured a R6bn funding guarantee with United States export credit agency US-Exim,” said the company today.

“This is a massive thumbs-up from the international investor community, affirming Transnet’s creditworthiness and South Africa’s attractiveness as an investment destination.”

The guarantee enables Transnet to raise funds in the markets for the financing of the GE locomotive transaction, said the parastatal.

“It allows for Transnet to negotiate favourable repayment terms, including the tenor and interest rates.”

“The required funding will be raised through bank loans supported by the US-Exim guarantee.”

The terms of funding to be backed by the guarantee will be dependent on a number of factors, including market conditions, pricing and investor appetite.

“The facility will be drawn over a three-year period in line with the delivery schedule for the locomotives. The repayment period is 14 years,” said Transnet.

In March, Transnet announced it awarded a R50bn contract to four manufacturers for the building of 1064 locomotives.

The contracts were part of Transnet’s multi-billion rand fleet renewal plan. The locomotives are to be used on the coal line and general freight business of Transnet Freight Rail.

The contracts were awarded to China’s CSR Zhuzhou Electric Locomotive and Bombardier Transportation SA to supply 599 electric locomotives, while General Electric South Africa Technologies and CNR Rolling Stock South Africa (Pty) Ltd would build and supply 465 diesel locomotives.

Transnet said it raised funds on the strength of its financial position and received no funding or guarantees from the fiscus.

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