Resgen enters into debt deal to fund rail link for Boikarabelo

5th May 2020

By: Donna Slater

Features Deputy Editor and Chief Photographer


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JSE-listed energy resources company Resource Generation (Resgen) reports that its subsidiary, Ledjadja Coal has entered into nonbinding equity and debt term sheets with Pan African Infrastructure Development Fund 2 SA (PAIDF2SA) and Pan African Infrastructure Development Fund 2 limited liability company (PAIDF2LLC) for the funding of the Boikarabelo coal project rail link.

The 44 km rail link will connect the Boikarabelo coal mine to Transnet Freight Rail's main rail line.

Resgen interim MD and CEO Leapeetswe Molotsane says the execution of these term sheets is significant and marks another important milestone in the company’s pursuit of full funding for the construction of the Boikarabelo mine.

The funding will be undertaken by either PAIDF2SA or PAIDF2LLC, under the management of infrastructure fund manager Harith General Partners.

Prior to signing the term sheets, Resgen, on February 17, noted that negotiations were under way to secure funding for the construction of the rail link. It was also noted then that negotiations were proceeding on the basis of establishing a special purpose vehicle (SPV) to raise the required funds, as well as to build, own and operate the rail link in exchange for a commercially agreed transport tariff arrangement with Ledjadja Coal.

Bula Waterberg Rail has now been incorporated in South Africa as the SPV for this purpose.

The rail link negotiations had been proceeding on the basis of a R750-million funding package with Ledjadja Coal, which owns a 49.9% interest in the SPV.

However, a recent review of the rail link funding requirements has identified the opportunity to reduce the total funding requirement to about R700-million.

Resgen notes that although interim approvals have been given by Harith at various stages of the negotiations, the term sheets are not legally binding on the parties until final approval by the Harith investment committee and board.

He says the mine funding package approved by shareholders on April 7 includes a number of conditions precedent including finalisation of the rail link funding arrangements and execution of these term sheets brings Resgen a step closer to financial close of the funding packages.

“All parties to this transaction have committed to secure the final approvals and to execute the legally binding documentation as quickly as possible and hopefully by end May.”

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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