Transnet has signed a R12 billion club loan with five major financial institutions.

The company will use the proceeds of the loan to fund its locomotive fleet acquisition programme. The acquisition is the single-biggest item of Transnet’s Market Demand Strategy.

Participants in the club loan, which was concluded with each funder separately but on the same commercial terms, are:

• Absa – R3 billion
• Nedbank – R3 billion
• Bank of China – R3 billion
• Futuregrowth Asset Managers – R1.5 billion
• Old Mutual Specialised Finance – R1.5 billion

Securing of the funds follows investor roadshows, targeted at potential funders from within South Africa.

The club loan is in addition to the $1.5 billion loan facility agreed with China Development Bank (CDB) in June this year. The company has an option to increase the CDB facility to $2.5 billion as part of an MOU between China and South Africa.

Transnet says all funders agreed to a term of 15 years at competitive rates, including a grace period of four and a half years, while the locomotives are under construction. This is in keeping with the company’s approved funding strategy aimed at achieving a desired match between long-term debt and assets.

Transnet has spent R108,9 billion in its rail, ports and pipelines infrastructure since it launched the MDS in 2012. This will rise to R125 billion by the end of the current financial year.

Further investments of between R340 billion and R380 billion are planned over the next 10 years, depending on validated demand.