Sun, 31 May 2020

Eskom, the state-owned South African power utility with about $30bn (R430bn) of debt, sought advisers on how to implement a government bailout seven months after President Cyril Ramaphosa said the company would be reorganized.

Eskom issued an invitation to tender for "financial services for implementation for government support package" on Aug. 23, according to a document seen by Bloomberg. The tender, which closed on Sept. 3, requires that the team provide its record in "providing holistic solutions to restore the viability of companies in financial distress for transaction values in excess of $1bn."

Eskom, which supplies about 95% of South Africa's power, has been granted R128bn ($8.7bn) in state bailouts over the next three years to remain solvent. The government has proposed splitting the utility into generation, transmission and distribution units and is evaluating a range of options to reduce the costs of the debt and improve its performance.

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The company must be able to mobilize a team to start the work within a week of the award of the contract, according to the document. Bidders must also provide relevant experience advising in South Africa and internationally on debt management transactions, sovereign debt exchanges and liquidity management exercises for transactions over $1bn, it said.

Public Enterprises Minister Pravin Gordhan said President Cyril Ramaphosa is expected to release a policy paper on Eskom later this month. Eskom didn't immediately respond to a request for comment.

According to the tender document, the advisers will:

Assist the government in assessing the various options for the debtAssess the impact of the options on government financesAssess the impact of doing nothing and of a possible Eskom defaultAssist with the communication of any recovery plan to all "stakeholders"

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