PIC says it is willing to convert R90 billion of Eskom's debt into equity

Pegasus

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I don't know were to get any stats on it. Im not going to dig for that.

It's not just about loosing money. It's the freedom to do with your money what you want.
Then it might not be the best investment even if it doesn't go negative.
Then even if you can argue it wasn't too bad under the Nats you now have the ANC.
If the ANC want to do it, then we will have to be able to explain why it is bad.

Regulation 28 is bad enough.
 

Pegasus

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I don't know were to get any stats on it. Im not going to dig for that.

It's not just about loosing money. It's the freedom to do with your money what you want.
Then it might not be the best investment even if it doesn't go negative.
Then even if you can argue it wasn't too bad under the Nats you now have the ANC.
Some nerds looked at it.

And yep, it was bad.

 

Gordon_R

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Some nerds looked at it.

And yep, it was bad.

Prescribed assets and persistent high inflation are both like termites eating at the wooden floors of your house. You won't notice much at first, but after a while you will see big problems, and may end up with a worthless pile of sawdust...
 

Pegasus

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Prescribed assets and persistent high inflation are both like termites eating at the wooden floors of your house. You won't notice much at first, but after a while you will see big problems, and may end up with a worthless pile of sawdust...
I'll sure as fck notice if 33% to 75% of my pension is sitting in junk bonds.
 

JurgensBeMe

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What does this exactly mean, equity is shares. Are they privatising eskom, becuase if they are not i don't think they really understand what the word equity means
 

Gordon_R

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I'll sure as fck notice if 33% to 75% of my pension is sitting in junk bonds.
Its like the boiling frog trick. First its 10% and nobody complains, then 25% and a few complain, then 50% and you realise its too late to complain...
 

Vorastra

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Maybe I don't understand what "converting debt into equity" means. Is it basically PIC is going to buy up Eskom's debt...? That's pretty normal though for investment companies, to buy up company debt. Isn't it?
 

Pegasus

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Draining of PIC funds starts here.
You reckon?





 

JurgensBeMe

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Well, 90 percent of public officers are black. They are stealing from there own people not from me. No white person wants to work for the government anyway.
 

donal

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Robbing Peter to pay Paul...

At least my pension is left alone (for now at least)
Just wait for comrade tito's Budget 2020 - the Extended Dance to My Tune Remix on 24th June.. don't think they will call it prescribed assets though: it will be called something seemingly innoccuous with 'transformation' in the title.
 

Pegasus

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Just wait for comrade tito's Budget 2020 - the Extended Dance to My Tune Remix on 24th June.. don't think they will call it prescribed assets though: it will be called something seemingly innoccuous with 'transformation' in the title.
It”ll be called capital outflow.
 

donal

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Maybe I don't understand what "converting debt into equity" means. Is it basically PIC is going to buy up Eskom's debt...? That's pretty normal though for investment companies, to buy up company debt. Isn't it?
Yes - normal for investment companies to buy up debt of well managed entities with sound corporate governance. I think we can all agree eskom comes nowhere near that description.
 

Johnatan56

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Maybe I don't understand what "converting debt into equity" means. Is it basically PIC is going to buy up Eskom's debt...? That's pretty normal though for investment companies, to buy up company debt. Isn't it?
No, it means that for every rand that Eskom owes, the PIC will get the equivalent value in shares.

This for a government owned enterprise where no dividends are paid that has for years been making a substantially loss.

The equity conversion would make sense if the PIC would be able to then make decisions on the board to steer towards profitability. This purchase of shares converts guaranteed returns at a good rate to hope for a dividend payout is a clear violation of the PIC mandate as it could be construed as reckless investment as there's no such things as Eskom shares and there is no chance of profit for even long term outlook (as Eskom is an soe it is not there to turn a profit).
 

Vorastra

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Yes - normal for investment companies to buy up debt of well managed entities with sound corporate governance. I think we can all agree eskom comes nowhere near that description.
I agree, I just wanted to know if that's what was meant.
 

Johnatan56

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Just wait for comrade tito's Budget 2020 - the Extended Dance to My Tune Remix on 24th June.. don't think they will call it prescribed assets though: it will be called something seemingly innoccuous with 'transformation' in the title.
The problem is that if they do that everyone will drop their retirement contributions to zero and pretty much all financial institutions will take that to court as people would liquidate their retirements no matter the penalties as something is better than nothing.

What's funny is that most retirement investment vehicles will include government bonds and will invest in other government projects as long as the return is good enough, which is why many investment institutions already invest in government projects, there's no need to force it. All forcing it would do is cause a collapse to happen overnight and that's why you haven't seen Gwede actually do anything (as there are definitely enough in the ANC who realize that it would be a very bad idea, but they won't directly say no, same as for EWC, as they want their voters to think of the pie in the sky).
 

JurgensBeMe

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What's funny is that most retirement investment vehicles will include government bonds and will invest in other government projects as long as the return is good enough,
Bonds has always been part of the four main types of investments. I cannot see how any type of low risk-investment can avoid them. Investment in bonds is an investment in Eskom and all other state-owned entities and that is nothing specific to SA. The four main types being...
  • Cash
  • Fixed interest
  • Shares
  • Property
 

Urist

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I'm pretty sure the unions are going to make a scene out of this, if they have their members's best interests at heart. Prepare for lockdown lockdown, level 10
 

Paul_S

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Well, 90 percent of public officers are black. They are stealing from there own people not from me. No white person wants to work for the government anyway.
Who do you think is going to bail out the GEPF (government employees pension fund) when their "investments" in SOEs fail? The tax payers of course (you). The GEPF is a defined benefit pension scheme which means that even if the PIC lost all of the GEPF fund money through mismanagement, the tax payer will still be on the hook to bail it out.

 
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