Treasury announces support package for Transnet
Treasury has issued an R47 billion guarantee to Transnet to deal with immediate debt obligations and to support its recovery plan, it said on Friday.The guarantee will enable Transnet to raise new debt, which would not be possible without it. The Treasury said it had decided not to provide the company with an equity injection at this point because the budget for 2023/24 was closed.
Last month, the board of Transnet issued a turnaround plan that requires a R47 billion equity injection and R61 billion of debt relief.
Transnet is beset with financial and operational problems. It is unable to service its R135 billion debt from earnings and has been unable to increase revenue due to failing infrastructure and capital equipment. In a statement on Friday, Treasury said that given the seriousness of these challenges, it had decided to grant the guarantee facility.
Said the statement: The financial support package provided for the entity is an R47 billion guarantee facility against which Transnet will draw down an initial amount of R22.8 billion to deal with immediate liquidity matters such as settling maturing debt. The government has not considered an equity injection given that the budget for 2023/24 is closed and is confident that the guarantee facility alongside swift implementation of the Transnet Recovery Plan will be sufficient to resolve Transnet's challenges.-Fin24