SOUTH Africa’s finance minister Enoch Godongwana told Bloomberg News that Transnet was waiting on lenders which had yet to say if they would waive their covenants with the state-owned rail and ports firm.
“They are breaching the covenants but the banks are not taking them on,” Godongwana told Bloomberg News today. “The trick is going to be whether the banks are going to agree to extend,” he added.
Referring to Transnet’s 2022 financial results, published in December, Bloomberg News said the utility didn’t generate enough cash to cover interest on its loans. Transnet said that the affected lenders “have provided the required waivers”.
The Minerals Council took the unusual step of demanding the resignation of Transnet’s CEO Portia Derby. In a letter from the council’s chairperson Nolitha Fakude it said Transnet was at risk of bankrupty.
In December, Business Day reported Transnet is facing two bond repayments coming due in the next two months that are worth a combined R1.088bn.
“We cannot see how the company will avoid breaching its debt covenants early in 2023, at which stage the directors of Transnet will need to place the company into liquidation or risk being sued for trading recklessly,” the Minerals Council said in the letter.
Transnet’s underperformance last year was a major source of concern for exporters including the country’s coal, iron ore and other mineral producers. In October, Roger Baxter, the outgoing CEO of the Minerals Council, likened Transnet’s problems to another Eskom in the making.
He estimated that an extra R151bn could be earned in annual export revenues if the “optimised” logistical levels were achieved across the country’s main bulk commodity exports.
Instead of responding to these comments, Derby said in a presentation at the Joburg Indaba, a conference, that any additional capacity Transnet created on its rail routes would be reserved for new, black-owned businesses.