TRANSNET CEO Siyabonga Gama says the company plans to sue Futuregrowth for damages following the asset manager’s “reckless and unfortunate” announcement that it would be freezing funding to six state-owned companies.
Earlier this month, Futuregrowth announced its decision to to dump six state-owned entities, including Transnet, Eskom, and South African National Roads Agency, due to questionable governance and political uncertainty. The others are the Industrial Development Corporation (IDC), the Land Bank and the Development Bank of Southern Africa (DBSA).
Transnet has sought to allay jitters triggered by Futuregrowth’s move by clarifying that it had ample liquidity for the current financial year.
The state-owned freight and logistics company said it had funded its full borrowing requirement for 2016-17, and had R22bn available. Futuregrowth represented only 1,25% of its R120bn debt, Transnet said.
Transnet described as “regrettable” that it had learned about Futuregrowth’s decision in the media when it engaged with investors regularly.
On Wednesday, Gama said the state-owned company was preparing a statement of claim for damages it had suffered as a result of Futuregrowth’s announcement it planned to suspend loans to the state-owned enterprises.
“We are preparing a statement of claim for damages suffered as a result of these reckless and unfortunate utterances by a renegade senior executive at Futuregrowth,” said Gama.
Transnet raised funding from domestic and international lenders on the strength of its balance sheet with no government guarantees.
Transnet would continue to pursue its R340bn-R380bn market demand strategy — the company’s infrastructure investment programme to revitalise railways, ports and pipelines.
Last year Transnet raised R12bn in a club loan through five financial institutions to fund the purchase of 1,064 locomotives it has procured from international manufacturers.
READ THIS: Danish bank becomes second money manager to stop lending to Eskom
The five participating institutions include Nedbank, Absa and the Bank of China, which each provided R3bn, while Futuregrowth Asset Managers and Old Mutual Specialised Finance have each contributed R1.5bn.
The locomotives are part of a R50bn deal through which the parastatal will procure 1,064 locomotives from international manufacturers Bombardier, General Electric, China South Rail and China North Rail.
Last year, Transnet became the first state-owned firm to secure significant financing from China, when it signed a 15-year, R30bn loan agreement with China Development Bank. The funding is for locomotives that will be built by China North Rail and China South Rail.
Transnet raised R6bn this year from South African banks at a reduced cost after it obtained a guarantee for the loans from the US Export-Import Bank to finance the locomotives that GE will build.
It also secured R3bn in funding from Germany’s KfW Development Bank to finance 240 locomotives that will be built by Bombardier at Transnet’s facilities in Durban.
© BDlive 2016
Follow