Eskom starts a process to appoint financial advisers

Eskom, the South African state-owned utility that’s more than $30 billion in debt, said it’s started a process of appointing financial advisers.

The South African government this week said it will boost an earlier bailout with an extra R59 billion ($4.2 billion) spread over the next two years. President Cyril Ramaphosa in February said the utility would be split into three entities and last month announced a chief restructuring officer would be appointed “soon” to oversee the transition. An appointment is yet to be made.

Read: Eskom gets bailout funding. Now it needs a rescue plan

“Eskom has initiated a process to appoint advisers to assist it with the planning phase of the implementation of the government support package,” the utility said in a response to queries. “Following the outcome of the process Eskom will determine the way forward with this initiative.”

‘Credit negative’

The latest bailout accelerates the dispersal of funds that Eskom needs to service its debt as demand for power declines. It comes just five months after Ramaphosa announced a three-year R69 billion cash injection for the utility. Most analysts and bondholders see it as sufficient to keep the company solvent for now.

Read: Moody’s says new Eskom support credit negative for SA

Moody’s Investors Service, the only major rating company that still assesses South Africa at investment grade, said on Thursday that the decision to more than double state financial support is “credit negative” because it will be a drain on the state’s fiscal resources.

The company plans to report results for the 12 months through March at the end of July, Eskom Chairman Jabu Mabuza said earlier this month. Eskom has also started a process to receive applications for the replacement of CEO Phakamani Hadebe, who will step down next week due to health reasons.

© 2019 Bloomberg L.P.