Specialist asset manager Futuregrowth, has warned that the debt relief for Eskom that is expected in Wednesday's budget must be fair to all types of creditors and big enough – well above 50% – to restore the company to sustainability. | News24_Business
Specialist asset manager Futuregrowth, a large investor in government debt, has warned that the debt relief for Eskom that is expected in Wednesday's budget must be fair to all types of creditors and big enough – well above 50% – to restore the company to sustainability.
But warns Futuregrowth, government needs to go big – even taking 50% of Eskom's debt will not be enough – if the company is expected to service its debt costs in the future. First, all debt holders must be treated the same, and no one set of creditors advantaged or disadvantaged over others. On the quantum, Constantatos says that in the past financial year, Eskom's debt service costs stood at R33 billion, but earnings before interest and tax came to R11.3 billion. This means that halving Eskom's debt and, therefore, its debt services costs to around R16.5 billion would still leave a R5 billion debt service gap that Eskom would be unable to meet.
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