Eskom’s Holding Firm to Keep All $26 Billion of Debt After Split
Eskom’s Holding Firm to Keep All $26 Billion of Debt After Split
(Bloomberg) -- Eskom Holdings SOC Ltd. is likely to keep all the existing debt at a holding company level even after the beleaguered South African utility splits into three entities, in a move that will preserve loan agreements and government guarantees, a person with knowledge of the matter said.
The three divisions -- transmission, generation and distribution -- will have separate agreements with the holding company to repay their share of the debt, the person said, asking not to be identified as the discussions are private. That arrangement may change later, the person said. Eskom is straining under 402 billion rand ($26 billion) of debt and has to rely on government handouts.
Keeping the loan at the holding company level will mean creditors won’t have to negotiate new agreements. South Africa’s National Treasury earlier this month said that the state company will seek bondholder approval for a plan to spread its debt between the new entities. Lenders will have to approve the reorganization, it said, without giving details.
A transmission company has already been established and registered, and Eskom has a Dec. 31 deadline to complete the legal separation of the entity, the Treasury said. Generation and distribution units will follow “in the next 12 months,” it said.
Eskom declined to comment, while Dondo Mogajane, director general at the National Treasury didn’t respond to a text message seeking comment.
About 70% of Eskom’s debt is guaranteed by the government.
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