Cash-strapped State-owned power utility Eskom confirmed on Thursday that its negotiations with funders to meet immediate debt-repayment obligations were at an advanced stage and that it expected to sign off on the deals “in a day or two”.

Eskom acting CEO Phakamani Hadebe revealed this week that the utility had secured in-principle commitments from lenders to provide Eskom with the R20-billion it needed to meet debt obligations that would arise before the end of February.

He indicated that the first R10-billion repayment would come due in the first week of February, while the second repayment would arise before February 27.

In response to questions posed by Engineering News Online, Eskom said the facilities were still being finalised and that it could, thus, not provide details as to the identities of the lenders.

However, speaking at the group’s interim results, which had been delayed owing to concerns about the group’s going-concern status, Hadebe gave a strong indication that the emergency funding would be provided by domestic lenders.

He said that, following the appointment of the new board on January 20, a list of Eskom’s key funders had been requested and “we were happy that these were people that we know”. Prior to taking up the position, Hadebe had worked for Barclays Africa.

Questioned as to what the loan conditions would be, Eskom said, while it was still finalising the agreements, these would “be in line with existing facility conditions”.  The interest rate was also being negotiated and would be aligned to market benchmarks.

Both Moody’s Investor Services and Fitch Ratings downgraded Eskom even deeper into junk territory in January.

Eskom’s financials deteriorated in the first half of its 2017/18 financial year, with net profit falling to R6-billion from R10-billion in the corresponding period of 2016/17, while liquid assets shrunk from R30-billion to R9-billion over the same period. The group’s debt rose to R367-billion and its debt-to-equity ratio deteriorated to above 70%.

Eskom told Engineering News Online that, once the R20-billion had been secured, there would be no further funding gaps ahead of its March 31 financial year-end.

The utility was also in the process of finalising its corporate plan for 2018/19, which would be followed by a borrowing plan. It was targeting to have both signed off by the end of February.

The 2018/19 plan would “explore innovative and traditional funding sources to execute the borrowing plan”, including development finance institutions, export credit agencies and the debt capital markets.

However, the new Eskom leadership would also be looking at ways to strengthen the group’s capital structure, and new chairperson Jabu Mabuza said all options would be considered, including asset sales.

Hadebe confirmed that it might even consider approaching other public institutions, such as the Industrial Development Corporation, the Development Bank of Southern Africa and the Public Investment Corporation, with proposals for a debt-to-equity conversion.