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Transnet, a leading rail, port, and pipeline company headquartered in Johannesburg and led by South African businesswoman Portia Derby, has signed a five-year senior unsecured term loan facility worth $1.5 billion with a group of international lenders led by Deutsche Bank AG.
The transaction represents Transnet’s largest funding transaction in seven years.
The funds secured from the international syndicated loan market will be used to put the group back on track for long-term growth following a series of operational disruptions.
The credit facility will be used to finance the company’s capital expansion program and refinance existing debt in accordance with the group’s 2022-2023 funding plan, with the first drawdown of $685 million scheduled for July 2022.
Apart from Deutsche Bank AG, Africa Finance Corporation, and African Export-Import Bank, which served as bookrunners and arrangers for the $1.5-billion credit facility, the transaction also included participation from development finance institutions.
Transnet will have roughly $800 million available for drawdown until Dec. 31, subject to market conditions and investor appetite. The facility will be structured to be repaid in eight equal semi-annual installments after a 12-month grace period, according to the transaction terms.
Nonkululeko Dlamini, Transnet group chief financial officer, said: “This is a significant milestone to stabilize Transnet’s liquidity position in support of our financial sustainability.” “The confidence shown by these investors is encouraging, and we will continue to focus on improving Transnet’s operational and financial performance.”
Under the leadership of Derby, Transnet acts as the custodian of ports, railways, and pipelines, and facilitates the most crucial part of the freight logistics chain that delivers goods to South Africans.
The group reported a 14-percent drop in volumes hauled in its last fiscal year due to large-scale theft of copper cables, insufficient maintenance, and a lack of locomotives that crippled its freight rail network.
Nearly three months ago, the South African firm declared force majeure and moved to terminate long-term coal transportation agreements due to a lack of locomotives, large-scale copper cable theft, and infrastructure vandalism.
