Eskom said the National Treasury is assessing whether to convert R16 billion of bailout funds into equity.
Eskom said it submitted documentation on October 31 that, if if the Treasury assesses that conditions have been met, will allow it to convert the subordinated loan into equity through the issues of new shares.
Officials at the utility said a decision is expected soon, according to a person on an investor call Eskom held on Wednesday. The person asked not to be identified because the conversation was private.
This is part of a R254 billion government bailout being extended to arrest the decline in Eskom’s performance, which has caused near-daily power cuts. Having the government take a stake in the company would lessen a debt-service burden that’s prevented Eskom from carrying out adequate maintenance.
It will “reduce debt, increase equity and strengthen the balance sheet,” Eskom said in a response to questions. Further conversions may take place at a later date, it said.
In its first-half results presentation, the company disclosed that it’s heading for a seventh consecutive annual loss.
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