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Mar 26, 2009

Transnet secures R4bn loan from Japanese Bank for port expansion

Transnet acting CE Chris Wells discusses the significance of the loan agreement it had signed with the Japan Bank of International Cooperation (Videographer: Lizelle Cronje; Editing: Darlene Creamer)
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State-owned freight logistics group Transnet has signed a R4-billion loan agreement with the Japan Bank of International Cooperation (JBIC), as part of its R80-billion capital investment programme, acting CE Chris Wells announced in Johannesburg, on Thursday.

Wells said the ¥35-billion loan would be used to fund the widening and deepening of the entrance to the Durban harbour, which was one the group’s strategically significant projects.

The loan had a two-year drawdown and a ten-year amortising schedule during which 20 payments would be made.

Wells would not be drawn on what interest rate would be paid, only saying that it was below Transnet’s weighted average debt costs, which was “well below” 12%.

He added that this was the first time the group had secured a loan in the international market. It would, however, continue to seek finance from the international market, but this would not exceed one-third of the R30-billion it was hoping to raise in total.

This loan, together with the R5,7-billion it had secured with eight financial institutions last week, already represented about one-third of the funding it required.

Last week, Wells announced that it had secured the loans with Standard Bank plc, through Standard Bank South Africa, Absa Capital, Nedbank, Citi and Rand Merchant Bank (RMB). RMB had also coordinated the participation of Old Mutual Specialised Finance, the China Construction Bank and Momentum.

At the time, Wells had said that it was also in talks with two other financiers, possibly the JBIC and the African Development Bank (AfDB).

Wells noted on Thursday that, as part of the loan agreement, Transnet has agreed to be supportive of Japanese interests in South Africa.

JBIC head of finance for the Europe, Middle East and Africa region Toshiro Machii explained, however, that this did not mean that Transnet would be pressured into procuring products and services from Japanese companies.

He said that the bank would be satisfied with the outcome of tenders in which Japanese companies were participating, whether they were awarded the tenders or not, as long as the tender process was conducted fairly.

JBIC leveraged a 40% participation from other Japanese financial institutions, including the Bank of Tokyo Mitsubishi UFJ, the Mizuho Corporate Bank and the Sumitomo Mitsui Banking Corporation in the loan.

JBIC had a mandate to fund projects that support Japanese companies overseas, with Machii stating that Japanese companies would benefit by the widening and deepening of the harbour entrance, as the harbour was heavily used by Japanese companies.

Further, Japanese maritime operators were also frequent users of the harbour.

Meanwhile, Wells told Engineering News Online that it was still in talks with the AfDB as part of its plans to secure foreign funding.

He hoped this would come to fruition within a few months.

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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