{"id":469674,"date":"2021-02-20T14:59:00","date_gmt":"2021-02-20T12:59:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=469674"},"modified":"2021-02-20T14:59:00","modified_gmt":"2021-02-20T12:59:00","slug":"banks-and-other-investors-in-talks-to-solve-eskoms-r464-billion-debt","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/energy\/469674\/banks-and-other-investors-in-talks-to-solve-eskoms-r464-billion-debt\/","title":{"rendered":"Banks and other investors in talks to solve Eskom’s R464 billion debt"},"content":{"rendered":"

Nedbank Group Ltd. is leading discussions to restructure South African power utility Eskom Holdings SOC Ltd.\u2019s R464 billion ($32 billion) debt load, according to people familiar with the talks.<\/p>\n

The parties met in recent days, and one of the options is to transfer at least R100 billion of debt to a special-purpose vehicle that would be overseen by the Public Investment Corp., Africa\u2019s biggest fund manager, the people said.<\/p>\n

\u201cEskom intends to work constructively with all its creditors to develop a plan that will improve the company\u2019s balance sheet while adequately catering for the requirements of its lenders and other stakeholders,\u201d the utility said in response to questions.<\/p>\n

\u201cThe utility is in regular discussions with its stakeholders to agree on the best solution to shape the balance sheet as the company moves to the next phase of its strategy.\u201d<\/p>\n

Eskom, described by Goldman Sachs Group Inc. as the biggest threat to the South African economy, has become mired in debt as a result of overspending on projects.<\/p>\n

The utility can\u2019t meet its costs and is subjecting the country to intermittent power outages as a result of inadequate maintenance at its ageing fleet of coal-fired power plants.<\/p>\n

\"\"<\/a><\/p>\n

The yield premium of Eskom\u2019s 2028 dollar bonds over comparable government debt narrowed on Friday to the least in 17 months, suggesting bondholders are gaining confidence in a rescue plan.<\/p>\n

\u201cWe continuously engage with strategically important state-owned companies including Eskom,\u201d Nedbank said in an emailed response to queries.<\/p>\n

\u201cThese constructive engagements are held with positive intent, together with other financial institutions and respective shareholders, and focus on creating solutions in respect of liquidity challenges faced by state-owned companies.\u201d<\/p>\n

Interest payments<\/strong><\/p>\n

Eskom has previously said it can only service about R200 billion of debt, and lenders may help it meet some of its upcoming interest payments, said the people.<\/p>\n

The PIC, which oversees the pensions of South African government workers, manages R1.91 trillion of assets, including about R90 billion of Eskom\u2019s bonds.<\/p>\n

The company has previously supported a failing retailer – Edcon Holdings Ltd. – and has invested heavily in the debt of other struggling state-owned entities.<\/p>\n

It has previously proposed converting the Eskom debt it holds into equity.<\/p>\n

\u201cThe PIC considers a wide range of possible options in this regard, in light of the impact of energy security on all investments,\u201d a spokesman said by email.<\/p>\n

\u201cWhatever solution the PIC eventually supports, if any, will be informed by clients\u2019 investment mandates and their risk-and-return expectations.\u201d<\/p>\n

The Congress of South African Trade Unions, a key supporter of President Cyril Ramaphosa, has repeatedly urged the use of PIC funds to rescue Eskom.<\/p>\n

After transferring the debt to a special-purpose vehicle, the remaining liabilities could be divided between three proposed Eskom units – transmission, generation and distribution – when a planned split\u00a0comes into effect, the people said.<\/p>\n

No final decisions have been made and proposals will be presented to the National Treasury in the coming weeks, said the people.<\/p>\n

The Treasury didn\u2019t immediately respond to emailed queries. Neither did the Ministry of Public Enterprises, which oversees Eskom. The presidency declined to comment.<\/p>\n

\n

Read: A look Shoprite\u2019s plans to go off grid \u2013 including a building with enough solar panels to cover a soccer field<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Nedbank Group Ltd. is leading discussions to restructure South African power utility Eskom Holdings SOC Ltd.\u2019s R464 billion ($32 billion) debt load, according to people familiar with the talks.<\/p>\n","protected":false},"author":59,"featured_media":364548,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9874],"tags":[26],"class_list":["post-469674","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-headline"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/469674","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/59"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=469674"}],"version-history":[{"count":1,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/469674\/revisions"}],"predecessor-version":[{"id":469678,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/469674\/revisions\/469678"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/364548"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=469674"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=469674"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=469674"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}