Tag: interest

By Jan Cronje for Fin24

Mobile operator Cell C has defaulted on an interest payment on a $184m loan (about R2.7bn at current exchange rates) which was due in December 2019, according to a notice from its key shareholder Blue Label Telecoms Limited.

In a statement to shareholders on Tuesday, Blue Label said Cell C had also defaulted on interest and capital repayments related to the respective bilateral loan facilities between Cell C and Nedbank Limited, China Development Bank Corporation, Development Bank of Southern Africa Limited and Industrial and Commercial Bank of China Limited, which were due in January 2020.

Blue Label’s share price plunged by almost 12%.

“Currently, none of the bilateral loan facilities have been accelerated as noteholders are aware and support that Cell C is committed to resolving the situation by agreeing to restructuring terms with its lenders while it also continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness,” Blue Label said.

In a brief separate media statement, Cell C said that the suspension of payments was part of wider Cell C initiatives to “improve liquidity and to restructure the company’s balance sheet”.

“Cell C continues to work proactively with all stakeholders to improve its liquidity, debt profile and long-term competitiveness as part of its turnaround strategy,” it said.

Eskom forced to go into debt to pay interest

By Jan Cronje for Fin24

Cash-strapped power utility Eskom is needing to borrow money in order to pay interest on debt, its chairperson and interim CEO Jabu Mabuza told MPs.

Eskom leadership, together with Minister of Public Enterprises Pravin Gordhan, were briefing a joint sitting of three oversight committees on the utility’s finances on Tuesday.

Mabuza, who took over the role of interim CEO after Phakamani Hadebe resigned at the end of July, said the utility found itself in an unsustainable position. Its total debt was nearing R450bn, and it was not earning sufficient revenues from its businesses to service the interest on what it had borrowed.

“We find ourselves having to borrow to pay debt,” he said.

Electricity revenues over the past 5 years had been flat, he said, while operating costs had increased. Annual tariff increases, meanwhile, were less than what it had hoped for. He said Eskom was also owed some R38bn that it has not been able to collect.

Mabuza told committee members that the energy availability factor of its power plants had dropped to below 70%, which in turn had contributed to load shedding.

Gordhan told committee members Eskom would have run out of money by October without government support.

The utility has been granted two lifelines by the state. The first is a financial lifeline of R23bn per year (for three years) announced by Finance Minister Tito Mboweni in his February Budget. The second is a Special Appropriations Bill which allocates the utility R26bn for the 2019/20, and R33bn for the 2020/21.

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My Office News Ⓒ 2017 - Designed by A Collective


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