The Sunday Mail (Zimbabwe)

Diasporan group raises $400m

- Martin Kadzere Senior Business Reporter Mr Chimhandam­ba

THE Diaspora Infrastruc­ture Developmen­t Group (DIDG) has secured over $400 million for the recapitali­sation of the National Railway of Zimbabwe, a senior official has said.

The DIDG, a consortium of Zimbabwean investors living aboard, won the contract to revive the struggling State-owned railway company in 2017, but the implementa­tion of the deal took longer following protracted negotiatio­ns between Government and DIDG.

The initial framework agreement in which negotiatio­ns were to be concluded expired in February this year, but was extended to August 14.

DIDG has since met the deadline, with Africa Export-Import Bank appointed lead arranger for the transactio­n. In a letter to NRZ chairman Advocate Martin Dinha, DIDG executive chairman Mr Donovan Chimhandam­ba, said funding for the project had been secured.

“Following the extension of the framework agreement by the Government of Zimbabwe by a further six months from February 15 2019, we are pleased to confirm that as the Diaspora Infrastruc­ture Developmen­t Group, we have raised the required US$400 million funding for the NRZ Recapitali­sation Project, including an additional US$20 million to address start-up and working capital requiremen­ts of the Joint Venture Concession Company,” Mr Chimhandam­ba said.

“We also confirm that as DIDG, we have our shareholde­r approvals and we are ready to proceed with the implementa­tion of the project. We are also pleased to inform you that as DIDG, we have appointed the African Export-Import Bank (Afreximban­k) as our Mandated Lead Arranger for the NRZ US$400 million recapitali­sation project.

The deal is, however, subject to signing the joint venture agreements, which will pave way for opening of company accounts and the appointmen­t of a transition­al executive including non-executive chairman, interim chief executive officer as well as finance, technical and human resources executives. The release of the funds will, however, be subject to obtaining approvals including the consents, authorisat­ion, licenses and certificat­es from the appropriat­e authoritie­s and institutio­ns.

Mr Chimhandam­ba said DIDG has also received term sheets with funding in excess of US$900 million from the regional and internatio­nal banks participat­ing on the US$340 million, a debt facility to be arranged by Africa Import-Export Bank.

Afreximban­k has expressed to provide a loan amounting US$100 million, TDB Bank, US$75 million, Standard Bank, US$317 million while Nedbank and ABSA will chip in with US$200 million each.

After the singing of the agreements, Afreximban­k as the lead arranger will reengage and coordinate the lender group to provide optimal financing costs and terms to the project as funding is drawn down.

“We can confirm that based on the term sheets received, the senior debt will be priced indicative­ly at an interest rate of three-month US$ Libor plus an average margin of up to 600 basis points for ECA banked tranches,” said Mr Chimhandam­ba said.

Efforts to get a comment from Adv Dinha were unsuccessf­ul by the time of going to print.

NRZ used to be one of the largest employers in Zimbabwe but its fortunes waned after an economic meltdown between 2000 and 2008 that saw the country’s Gross Domestic Product falling by an estimated 40 percent between 2000 and 2008.

Zimbabwe Railways strategica­lly links the North-South corridors for southern Africa and cover a total of 3 077 kimometres, of which about 360 km is currently managed under the Beitbidge Bulawayo Railway concession, which is owned 85 percent by the JSE listed company Grindrod while the remainder in owned by NRZ.

In the 90s, the NRZ rail network used to transport over 14 million tonnes with peak traffic of 18 million tonnes in 1995.

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