e r 2 - Umgeni Water

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Chapter| Debt Management and Funding RequirementsLong-term: FY16 onwardsTable 16-3: Funding requirements (2015/16 to 2020/21)FUNDING REQUIREMENTS L/Term L/Term L/Term L/Term L/Term L/TermFinancial Year (R'm) F16 F17 F18 F19 F20 F21Operational Cash flows 845 801 740 810 855 948Capex - Gross (Escalated) (835) (1 189) (1 406) (1 220) (1 177) (964)Net Operating and Capex cash flow 10 (388) (666) (410) (321) (16)Capex - GrantsRefinance - Capital (existing Debt net of asset capital) (118) (69) (65) (65) (4) (605)EIB* (20) (20) (20) (20) (20) (20)Refinance - Finance costs (existing Debt) (52) (67) (118) (178) (234) (295)EIB (30) (28) (27) (25) (23) (21)Funding Requirements (210) (572) (896) (697) (603) (957)Redemption Portfolio - New bond (65) (155) (195) 415Net Incremental Funding (210) (572) (961) (852) (798) (542)Requirement p.a.Net (Funding) Investing requirementsOpening Balance Call investments 677 467 (105) (1 066) (1 919) (2 717)Closing Balance 467 (105) (1 066) (1 919) (2 717) (3 259)* European Investment BankThe current projections reflect that Umgeni Water will in the long term require significant additional long termfunding to provide for its next phase of high capital expenditure and the redemption of the UG21 bond and that itstariff increase will have to be above projected CPI levels if the organisation is to maintain an optimal gearing level.16.1.3 Terms and Conditions on which money is borrowedThe terms and conditions on which money is borrowed differ according to loan agreements and bond issues. Bankcommitted facilities offered can be for a full twelve months or for a specified seasonal period. This committedfacility would attract a facility fee on any unutilised balances during the agreed period only. Accessing theuncommitted facility will be subject to Umgeni Water giving the relevant banks at least forty-eight hours’ notice inorder that the bank may obtain the necessary credit approval to make the funds available to Umgeni Water.A summary of the various funding facilities that Umgeni Water currently has and major conditions relating tothose facilities are as per Table 16.4.1. Bank FundingTable 16.4: Bank Funding FacilitiesBank Type of facility Committed UncommittedFNB Working capital facility R50 millionRMB Multipurpose Treasury Facility R100 millionStandard Bank General banking facility R50 millionInvestec General credit facility R50 millionABSA Overnight facility R30 millionNedbank General banking facility R 49.9 millionFirst National BankInstruments available under the short-term direct facility are:• Overdraft – prime less 1% up to R10 million, thereafter prime;• Corporate term loans – negotiable rate;• Bankers acceptances (Acceptance credits) – negotiable rate;• Promissory Notes – negotiable rate;• Offshore Finance – negotiable rate; and• Call loans – negotiable rate.Page 124 Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016
| Debt Management and Funding Requirements ChapterStandard BankInstruments available under the general short-term bank facility are:• Overdraft – prime;• Call loans – negotiable rates;• Short-term loans – negotiable rates;• Revolving acceptance credit facility and foreign currency finance facility;• Offshore trade and working capital loans; and• Other instruments – as offered by the bank.Investec BankInstruments available under the general credit facility are:• Bank call facility – negotiable rates;• Foreign financing facility – negotiable rates; and• Foreign exchange dealing facility – negotiable rates.ABSA BankInstruments available under the general credit facility are:• Bank call facility – negotiable rates; and• Call bonds – negotiable rates.2. Annuity LoansTerms, conditions and maturity are specific to each loan agreement. The most significant loans and thebalances as at 30 June 2011 (forecast) are: DBSA loan 71, part of which is a variable interest rate fifteen-yearloan at, R 400 million and part (R86m) at a fixed interest rate; and DBSA loan 73, which is a fixed interest rateten-year loan, at R 211 million.3. Capital Market BondsDomestic Medium Term Note (DMTN) ProgrammeThe DMTN Programme was established to fund long term capital expenditure requirements and to fund shortterm working capital requirements. The DMTN Programme was completed and signed off on25 November 2009.Under this DMTN Programme, Umgeni Water may from time to time issue unsecured or secured registerednotes of any kind, in an aggregate outstanding nominal amount which will not exceed R 3 billion.• Notes may comprise without limitation:Fixed rate, floating rate, mixed rate, zero coupon notes or a combination of such foregoing notes or anyother type of notes determined by Umgeni Water and the relevant dealers.• Interest rateThe interest rate will be determined at the time of issuance of notes and will be specified in the ApplicablePricing Supplement.• MaturityThe Notes are not subject to any minimum or maximum maturity.• Issuance of UG21 bond under the DMTN ProgrammeOn 02 March 2010, after a very successful road show, Umgeni Water issued a R 600 million unsecuredfixed rate bond, the UG21, at an interest rate of 10.70 %, under the DMTN Programme.The UG21 falls due on 02 March 2021 and interest payments are due on 02 March and 02 September eachyear.The UG21 was oversubscribed at the time of issuance.Umgeni Water Five-Year Business Plan | 2011/2012 to 2015/2016 Page 125
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