Transnet gets R51 billion bailout

South Africa’s transport and finance ministries have approved a R51 billion guarantee facility to Transnet SOC Ltd., the nation’s struggling rail and ports operator.

The facility is effective immediately to support Transnet’s “capital investment program and to enable it to meet its debt obligations,” the transport ministry said in a statement Thursday. 

Transnet in its own statement said the facility will enable the company “to refinance maturing debt and ensure the organization’s continued access to adequate resources and facilities.”  

The rand extended a decline following the announcement, to trade 0.4% weaker at 18.0262 per dollar by 12h46 in Johannesburg.

The package includes a R41 billion loan guarantee for funding over the next two years, and a R10 billion guarantee for managing cash flow related to debt payments and capital investments, the ministry said.

To raise funds on the back of the guarantees, Transnet will need to meet certain operational and logistics-sector reform conditions, similar to those required for a R47 billion guarantee facility it received in 2023. 

Transnet is trying to turn around its logistics operations, from rail to ports, after years of graft and mismanagement hollowed the business out.

Its debt stood at almost R138 billion as at end-March 2024. 

Moody’s Ratings placed the company on review last week, warning that it will run out of money for operations and debt-servicing within three months unless it gets a government bailout.