Transnet has already received some of the waivers from its lenders it requires to avoid a ratings downgrade by Moody’s Investors Service, and the state-owned freight, logistics and port company is confident the matter will be finalised in the next few weeks.
The waivers would override a clause in the loan agreements that states that a qualified audit opinion would trigger a default and the need for an accelerated repayment of the loan.
Obtaining the waivers is important for Transnet to avoid the trigger, which would precipitate a financial crisis and probably lead to a credit ratings downgrade.
The amount of debt in need of the waivers in terms of the loan agreements is about R14bn, or about 11% of Transnet’s total debt of R127.7bn.
Moody’s warned a few weeks ago that there would be downward pressure on its rating of the parastatal if it did not get these waivers.
It said the qualified audit opinion on the financial statements for the fiscal year ended March 31 2019 made the company’s credit profile vulnerable given the need to maintain strong access to the debt market.
Transnet acting CFO Mark Gregg-MacDonald said on the sidelines of a meeting of parliament’s public enterprises committee on Wednesday that Transnet was confident about getting all the required waivers.
The qualification of Transnet’s financial statements for 2018/2019 was due to a technical contravention of the Public Finance Management Act with regard to procurement. Transnet disputes that finding.
The head of the board’s finance committee, Louis von Zeuner, told the committee that Transnet would apply to the government for a special dispensation to deal with historic issues arising out of state capture.
Transnet chair Popo Molefe added that extraordinary measures were needed to deal with the extraordinary circumstances as soon as possible.
He stressed that Transnet continued to be very robust as shown by the financial results for 2018.