Transnet secures R12bn loan

Transnet has secured a R12bn club loan from five lenders to fund its locomotives fleet acquisition programme.

“The acquisition is the single biggest item of Transnet’s record breaking infrastructure programme – the Market Demand Strategy,” Transnet Group Chief Executive Siyabonga Gama said.

Speaking on Monday during a media briefing in Johannesburg, Gama said the participants in the club loan include Absa, Nedbank, Bank of China, Futuregrowth Asset Managers, as well as Old Mutual Specialised Finance.

Transnet raised the R12bn in the open markets following investor roadshows targeted at potential funders from within South Africa.

The sessions, which were led by Gama and the acting Group Chief Financial Officer, Garry Pita, were intended to share the company’s performance and prospects. They were not for the purposes of making deals.

Gama said Transnet has been able to secure the loan at competitive rates.

All funders agreed to a term of 15 years, including a grace period of four and half years, while the locomotives are under construction.

“I think what is important for South Africa is that we are at the cusp of creating an efficient and reliable railway service, which will assist South African companies to become competitive in the markets in which they operate,” Gama said.

He said it was important for Transnet to strengthen the logistics in the country so that South Africa can create a competitive supply chain.

“But most importantly, we must make sure we have an efficient and reliable railway service that we are able to move commodities from the road onto rail so that we can reduce the number of trucks on our main highways.

“This investment will assist us greatly to create the kind of capacity that Transnet needs in order for us to be able to meet some of the objectives in the National Development Plan and … in the New Growth Path,” Gama said.

Transnet will be building 1,065 locomotives and 994 of those will be assembled in South Africa.

“On top of that, there is another 250 to 300 locomotives for our bulk services that have also been ordered, which will assist us to have replaced probably 1,350 locomotives over a space of 10 years.

“If you look at our current fleet of 2,400 locomotives, we will have about 1,500 … new locomotives… [This] also gives us the opportunity to maintain some of the older locomotives and also to retire some of the locomotives that we have, which are over 40 years and are quite expensive in terms of maintenance,” he said.