Eskom to seek bondholder approval for plan to spread debt load

daveza

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Apr 5, 2004
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High finance is a mystery to me.

A single debt split between three entities doesn't change the amount of the debt - can someone explain the point ?
 

Johnatan56

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Aug 23, 2013
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High finance is a mystery to me.

A single debt split between three entities doesn't change the amount of the debt - can someone explain the point ?
This is more a case of you're now going to have to hire new boards and stuff for each corporate entity.
Then lenders also have to agree as it's not the same company anymore, as investor I'd not want to invest in generation and would instead want transmission if stable return as no competition still there, while generation should at one point compete against IPP. Then the other argument will be, what % of debt does each corporation get? Splitting it evenly doesn't make sense since generation is a majority of where the debt comes from, etc.
 

RonSwanson

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May 21, 2018
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High finance is a mystery to me.

A single debt split between three entities doesn't change the amount of the debt - can someone explain the point ?
Yep. Instead of one hugely under-performing and corrupt SOE with huge debt, filled with incompetent and overpaid staff, there are now 3, each with it's own marketing budget (New Age Breakfast Briefings are not cheap), "oversight" boards and C-level execs as mentioned.
Sounds legit :unsure:
 

richjdavies

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The debt part isn't the point. Having 3 seperate businesses makes sense.
1. Runs the grid - delivering power to municipalities / and 2.
2. Is just like a municipality - it buys power from 1 and sells it to users
3. Generates power

Number 3 can then die a slow painful death and there isnt the conflict when an IPP comes up. Number 1 and number 2 WANT more IPPs, its only the poor performing #3 that has an EAF of 60%.

Number 1 is a very good company that is performing well (in my mind)
Number 2 needs to be better at collecting debt e.g. like Soweto
 

Oldfut

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Jan 28, 2018
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The debt part isn't the point. Having 3 seperate businesses makes sense.
1. Runs the grid - delivering power to municipalities / and 2.
2. Is just like a municipality - it buys power from 1 and sells it to users
3. Generates power

Number 3 can then die a slow painful death and there isnt the conflict when an IPP comes up. Number 1 and number 2 WANT more IPPs, its only the poor performing #3 that has an EAF of 60%.

Number 1 is a very good company that is performing well (in my mind)
Number 2 needs to be better at collecting debt e.g. like Soweto
Do you remember the sort of ok REDS concepts from some time ago? Same idea, stillborn. The split, as I understand it, was de Ruyter's primary task, he got side tracked, now there is something of a rush. My suspicion is, as quite a few think, it will just created three corrupt and bloated entities, packed with ANC apparatchiks instead of one. Why should we think any different??
 

richjdavies

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Why should we think any different??
I agree we shouldn't expect much.

It is just a first step in allowing true generator competition. At least you'll have one corrupt cadre saying "can we have more power please"
 
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