INVESTMENT BANKING DIVISION

Transcription

1 INVESTMENT BANKING DIVISION PROJECT MONITORING PLAN PROJECT NAME: Thelo Rolling Stock Leasing Infrastructure Project COUNTRY: PROJECT NO: South Africa DATE: March

2 A. GENERAL INFORMATION Project No: Abridged Project Description: Project Title: Thelo Rolling Stock Leasing The transaction entails provision of a facility of R 1 billion in senior secured debt from the DBSA to the Thelo Group for its rolling stock leasing company. Thelo Group (Pty) Ltd ( Thelo Group ), a black South African industrial investment company, is establishing a new company called Thelo Rolling Stock Leasing Pty Limited ( TRSL ) that will be a rolling stock supply company (a Rosco ) providing locomotives, freight cars and passenger trains under operating leases to rail operators (privately and state-owned), industrial companies and shippers initially in South Africa and subsequently south of the Sahara in Africa region ( SSA ). TRSL is being established as a greenfield operation by Thelo Group and is a key part of Thelo Group s vision to build a group, developing, investing in and operating an integrated transportation and infrastructure network which provides reliable and neutral, large scale multi-modal capacity in SA and subsequently SSA. Sector: Transport Proposed Investment: R1 billion in senior debt Sub-sector: Railway, Locomotives, Freight Cars, Passenger Trains Borrower: Thelo Group Borrower s Year-end: 30 September Security: Proportional guarantees from Thelo Group (Pty) Ltd Special notarial bonds over rolling stock Proportional Personal Guarantees from Ronnie Ntuli and Para Naidoo in proportion to their shareholding in Thelo Group (Pty) Ltd. Pledge and Cession of shares of Thelo Group s shares in Thelo Rolling Stock Leasing (Pty) Ltd Cession of shareholders loans of Thelo Group in Thelo Rolling Stock Leasing (Pty) Ltd Cession of insurance proceeds on rolling stock Cession of debtors of Thelo Rolling Stock Leasing (Pty) Ltd Cession of designated account Cession of the proceeds of the underlying rolling stock leasing agreements (if available) Keyman insurance on the life of Ronnie Ntuli for an amount of R5 million. Client Risk Score: 66 Overall Risk Rating: BBB- Planned Number of Annual client visits: Four (Quarterly) 2

3 B. LOAN SUMMARY DBSA Debt Other Debt-holders Equity Breakdown of funds to be raised R1 billion secured senior debt IDC R 840 million senior debt IDC R 357 million mezzanine IDC R 5 million Thelo R 5 million Loan period (Yrs) 15 years Grace period (Yrs) 1 year for both capital and interest Repayment frequency quarterly instalments in arrears Base rate Prime Rate. Margin: Minus 1.5% Interest Period: Quarterly in Arrears Penalty Interest: Anticipated date of first disbursement: 2% above the quoted margin No earlier than the date of fulfilment or waiver of all the Conditions Precedent. The Senior and Subordinated Convertible Loans will be disbursed in tranches based on milestones to be determined by the parties and against new leasing contracts that have been signed between Thelo Rolling Stock Leasing (Pty) Ltd and its clients Anticipated date of final disbursement: The Loan will be available for drawing for a fixed period until 31 December Any undrawn portion will be cancelled immediately following this availability period Special disbursementrelated issues There will be specific milestones for each lease/purchase agreement and DBSA disbursement Will have to conduct an inspection prior to each disbursement 3

4 KEY RISKS TO BE MONITORED CATEGORY Market Risk Completion Risk Operation and Maintenance Risk Environmental Risk Monitoring to focus on: The success of the project will be dependent on the ability of the client to secure deals that it has in the pipeline, which it has estimated to be in the region of R2 billion Each disbursement will depend on the purchase order and the lease agreements signed Lease agreements concluded and in pipeline will be inspected quarterly Delays in project rollout after disbursement could result in costs escalations, and a delay in revenue streams The completion risk will lie with the wagon stock suppliers UCW and TRE The contractual agreements with UCW and TRE should be inspected quarterly and is part of the CP s in the term sheet to be done to the satisfaction of the DBSA Whether or not the company has the ability to provide the quality of service expected of a rolling stock supply company Each lease agreement will have specific maintenance programme that will have to be monitored in quarterly reviews Whether or not all environmental regulations are complied with. There are no direct environmental risks on the part of Thelo Group Union Carriage and Wagon has been independently certified to be in compliance with ISO14001 standard for environmental management Transnet has been producing sustainability reports since

5 1. MONITORING SCHEDULE Key Events Risk Category Frequency Information Required Monitoring Mechanism Responsibility Other Resources Required Comments PRE-DISBURSEMENT PHASE (This includes Negotiation Stage, CP Compliance stage and Close) Finalization agreements of Legal risk Loan application request Signing of Agreements Compliance Close (once off) Early review report, approved appraisal report, tentative term sheet, risk report, legal report Signed Legal Documentation -Inspect the draft loan agreements to confirm inclusion of all information covenants as identified. -Verify that financial covenants are properly and clearly defined in the loan agreement -Confirm reading practicality of the loan agreement. Inspect that we have received all signed documentation including security registration documents Disbursement Compliance As required Disbursement CPs - Fulfillment of all CPs, other Terms and Conditions & Covenants; - SAP (budget) updated before first disbursements; and Subsequent disbursements Compliance As required No differentiation between initial and subsequent disbursements in the CP s of the term sheet -No event of default having occurred -As per availability period; -SAP (budget) updated before disbursement(s); -No event of default having occurred; -No material adverse change in the Project, the Company, the Shareholders or the Sponsors shall have occurred; and -Representations and warranties shall have been confirmed as of each disbursement date. -Stage completion report from the technical specialist, for each disbursement application of funds. LA, IO, PO IO,, GLS, CRU and CAD PO and CAD Credit Risk Analyst 5

6 Key Events Risk Category Frequency Information Required Monitoring Mechanism Responsibility Other Resources Required Comments POST DISBURSEMENT PHASE (Construction Stage, Monitoring Stage) Repayment Lease Agreements Covenants (especially financial covenants), Compliance Quarterly Amortisation schedule Check with CAD to ensure that loan repayments are up to date, Quarterly Lease Agreements up to Confirm that lease pipeline and Operational date conversion is satisfactory Compliance Quarterly List of all covenants and Inspect that they are all met their related documentation; Inspect the Compliance Certificates Compliance Certificates and observe that they are in compliance with them and CAD Client Monthly performance Operating and Monthly Monthly management accounts and other operating information for Thelo Group Inspection of management reports to ensure sustainability of operations Client Visits Risk assessment Operating and Operating and Quarterly Annual Management reports, other market reports Management reports, other market reports Security Review Compliance Annual Report on all security on hand year-end Operating and Annual Audited financials from client Regulatory Compliance Regulatory Annual Proof that Thelo Group have satisfied all relevant regulatory requirements. Social impact Social Impact Annual Information on employment creation and any other economic activity resulting directly from this project -Visit client quarterly to ascertain performance and review maintenance schedules. Will be carried out together with client visit and will include institutional assessment Will be carried out in conjunction with annual review of client Inspection of audited financials and possible visit to discuss these and other issues with client management -Inspection of regulatory documentation Analysis of information provided. This information will not come solely from the client but from other sources as well ( press reports etc) Complete DIR update, GLS GLS; OED Technical Specialists Credit Risk Analyst Technical Expert Social Analyst Environmental Impact Environmental Annual Environmental Review Study documents provided and, where necessary discuss issues of concern with the client Environmental Specialist 6

7 COMPILED BY: Olwethu Mafanya Portfolio Risk Management Date: REVIEWED BY: Gloria Mamba Divisional Executive: Portfolio Risk Management Date: 7