Due diligence done in NRZ deal

Due diligence done in NRZ deal
Published: 09 July 2018
THE National Railways of Zimbabwe (NRZ) has concluded due diligence towards reaching financial closure for the $400 million recapitalisation project.

NRZ and the Diaspora Infrastructure Development Group (DIDG)/Transnet have entered into a $400 million deal to fund the parastatal's rehabilitation project, which involves renewal of plant, equipment, rolling stock, track signalling and telecommunications infrastructure as well as information technology systems.

In the long-term, NRZ requires about $1,9 billion to fully recapitalise its operations. NRZ board chairman Mr Larry Mavima said in an interview that financial closure of the deal was now expected to be reached in the next few months.

"From our side we have to get satisfied with the documentation that is there, so is DIDG/Transnet and the banks. We have just concluded the due diligence and that due diligence is going to be considered by the board (NRZ) and considered also by the ministry (Transport and Infrastructural Development) before we move forward to the drafting of the joint venture agreement and the concession agreement," he said.

"We will achieve financial closure probably, if we move fast in the next two to three months. The banks are the ones that take their time when it come to financial closure …and setting of various agreements that will be required."

Cabinet has given NRZ the nod to proceed with the $400 million recapitalisation deal. Mr Mavima said once the joint venture and concession agreements were done, a detailed transaction agreement would be established.

"Cabinet has given us the greenlight to proceed, we (NRZ) are just waiting for all those necessary agreements to be in place before we can map the way forward.

"And naturally we have to be very careful in terms of how those agreements are drafted so that we don't end up tying ourselves to some things that we might regret in future," said Mr Mavima.

In February NRZ took delivery of   railway equipment on lease terms  comprising of locomotives, wagons and passenger coaches.

The equipment is meant to boost the NRZ's capacity to move freight which had dropped drastically as result of obsolete equipment.

During its glory days in the 1990s, the strategic logistics entity was  moving 18 million tonnes of freight annually but the figure nose-dived to 3,1 million tonnes in 2017.

In the first quarter this year, NRZ surpassed its revenue target of $18 million by five percent as its customers gain confidence in its capacity to move their products.
- chronicle
Tags: NRZ,


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