Transnet May Sell Bonds as Part of 20 Billion Rand Fundraising

Transnet SOC Ltd., South Africa’s state-owned ports and rail operator, plans to raise 20 billion rand ($2.16 billion) for the fiscal year through March 2014 to fund its expansion plans.

The figure compares with about 18 billion rand raised in the current financial year, Transnet Chief Financial Officer Anoj Singh said in an interview in Johannesburg today. About 60 percent of the target may be reached by selling five-to-ten year bonds, he said. “Beyond that, it gets expensive.”

Transnet plans to tap the South African market for about 60 percent of the bond issue and offshore investors for the rest, according to Singh. The 20 billion rand will go toward capital expenditure for the year of 35 billion rand, while debt funding requirements will be 11 percent higher than a year ago, he said.

Transnet started a seven year 300-billion rand development plan across Africa’s biggest economy and neighboring commodities-producing countries last year. Earnings before interest, taxes, depreciation and amortization rose 20 percent to 18.9 billion rand in the fiscal year 2012.

The company’s financial performance for the year ending March 2013 will be “reasonable,” Singh said. Transnet is “commodities linked” and weaker “global economic growth has impacted us.”

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