Transnet secures R25.5bn credit facility, with Deutsche Bank as lead bookrunner

State-owned port and rail monopoly Transnet has signed a major 5-year credit facility to the tune of $1.5 billion (around R25.5 billion) in its first internationally syndicated loan in almost a decade.

Announcing the agreement in a notice on the JSE on Tuesday, the group said the new credit facility is part of its 2022/2023 funding plan with the funds earmarked for infrastructure capex and to refinance existing debt.

Read: Eastern Cape gets export boost from Transnet’s R9bn ports investment

“Transnet is pleased to inform noteholders that it has successfully re-entered the international syndicated loan market by signing a five-year Senior Unsecured term loan facility of up to US$1.5 billion, led by Deutsche Bank AG,” it said.

According to the group, the transaction saw the participation from a number of investors and development finance institutions, which demonstrated “confidence in Transnet and expanding the company’s investor base”.

“The institutions included Deutsche Bank AG as global coordinator, bookrunner and arranger; Africa Finance Corporation as bookrunner and arranger; African Export-Import Bank as bookrunner and arranger and Ahli United Bank as lead manager,” it noted.

“This [transaction] is a significant milestone to stabilise Transnet’s liquidity position in support of our financial sustainability,” commented Transnet’s Group CFO Nonkululeko Dlamini.

“It has been the single largest funding transaction which Transnet has been able to secure in the last 7 years with the benefit of diversifying our investor base in the process.”

“The confidence that these investors have demonstrated is encouraging and we continue to focus on improving the operational and financial performance of Transnet,” she added.

Grace period

According to Transnet, the first drawdown amounting to $685 million is scheduled for July 2022.

“The facility is also structured to be repaid in eight equal semi-annual instalments after a 12-month grace period. There is an Accordion feature in the transaction for up to $1.5 billion, subject to Transnet’s consent until December 2022.

“Given the Accordion feature Transnet will have approximately $800 million available for drawdown up until 31 December 2022, subject to market conditions and investor appetite,” the group added.