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TCTA: Update on Liquidity and the Impact of the Land Bank Default
Trans-Caledon Tunnel Authority (TCTA)
WSP4 (LHWP) ZAG000020009
WSP5 (LHWP) ZAG000020017
As established by Notice No 2631 in Government Gazette No 10545 of 12 December 1986, and revised by
Notice No 277 in Government Gazette No 21017 of 24 March 2000 (the Notice of Establishment).
A Schedule 2 Public Finance Management Act No. 1 of 1999 (PFMA) entity.
UPDATE ON LIQUIDITY AND THE IMPACT OF THE LAND BANK DEFAULT
BACKGROUND AND SUMMARY
TCTA is releasing the following update in response to Noteholder and Lender enquiries about TCTA’s
exposure to the Land and Agriculture Development Bank’s (Land Bank) following the recent announcement
of liquidity challenges at that institution.
TCTA has exposure to Land Bank Promissory Notes, at this stage; this is expected to have some negative
impact on liquidity, but it should not significantly affect TCTA’s ability to meet its obligations to Noteholders,
Lenders and Suppliers.
LIQUIDITY POSITION
Liquidity across TCTA’s projects ranges from good (relative to expected expenditure) to robust.
As part of the planning for the impact of the Covid-19 crisis on operations and financial risk, TCTA shifted
most of its cash into call accounts at the big five South African banks. As a result TCTA’s projects have been
able to meet their obligations through the lockdown period and are in a good position to continue to do so for
the foreseeable future.
Cash and Cash Equivalents Across TCTA Projects (at 30 April 2020 - millions of Rands)
NCDs & Term Land Bank CPD & Money
Category/ Call Deposits Total by Project
Project Deposits Promissory Note Market Funds
VRS 2 533 429 100 994 4 055
BWP 44 - - 2 46
VRESAP 84 - - 14 98
MMTS-2 396 19 - 10 425
KWSAP 83 - - 58 142
MCWAP-1 431 15 - 249 695
Total by Category 3 570 463 100 1 327 5 461
The table below shows the estimated time to depletion of TCTA’s project cash resources, given normal
expected expenditure and assuming no cash inflows. TCTA’s most vulnerable project has cash to cover
about 2 months’ worth of expenditure.
Days cash on hand relative to Projected Expenditure (30 April 2020 – millions of Rands)
Current Cash Estimated time remaining depletion of cash Undrawn CP & RC
Project
Balances No of Days Date facilities
VRESAP 98 60 29 Jun 20 450
BWP 46 137 14 Sep 20 700
VRS 4 055 211 27 Nov 20 6 500
KWSAP 142 316 12 Mar 21 750
MMTS-2 425 316 12 Mar 21 514
MCWAP-1 695 greater than
335 days After March 2021 200
Land Bank Exposure
The VRS Project holds a R100 million Land Bank Promissory Note as part of the funds put aside for the
payment of the WSP4 and WSP5 coupons and the WSP4 redemption on 28 May 2020. Based on the Land
Bank’s announcements regarding its liquidity challenges, TCTA is currently working under the assumption
that the Note will not be redeemed on its legal maturity date, although at this stage there is no indication of
how long the Land Bank’s default will last.
Impact on Liquidity
This will have a negative impact on the VRS project’s liquidity, however, there are sufficient funds to for
TCTA to make payments on the WSP4 and WSP5 coupons and the WSP4 redemption on 28 May as well
as for the project’s other obligations to be met. From a liquidity analysis point of view, the missing R100
million reduces the VRS project’s days cash on hand from 211 (to 27 November) to 187 (to 3 November).
Days cash on hand relative to Projected Expenditure (30 April 2020 – millions of Rands)
Current Cash Estimated time remaining depletion of cash Undrawn CP & RC
Project
Balances No of Days Date facilities
VRESAP 98 60 29 Jun 20 450
BWP 46 137 14 Sep 20 700
VRS 3 955 187 3 Nov 20 6 500
KWSAP 142 316 12 Mar 21 750
MMTS-2 425 316 12 Mar 21 514
Greater than
MCWAP-1 695 335 days After March 2021 200
ACCOUNTS RECEIVABLES
Developments in TCTA’s ability to collect on its accounts receivables from the Department of Water and
Sanitation (DWS) are the main determinant of TCTA’s medium-term liquidity position.
At this stage the DWS accounts receivables position is healthy, with all projects receivables being within the
contracted payment terms (30 days).
Total TCTA Outstanding Receivables and Debtors Days (28 April 2020)
Last Payment Received Last Invoice Issued Current Accounts Receivables
Millions
of Rands Invoice Date Invoice Current Weighted No of
Amount Date Issued
Period Received Period Outstanding Average Days Months
LHWP Jan 2020 22 Apr 20 618 Feb 2020 12 Mar 20 533 - 1
BWP Feb 2020 31 Mar 20 13 Mar 2020 1 Apr 20 13 - 1
VRESAP Feb 2020 16 Apr 20 56 Feb 2020 12 Mar 20 - - 1
MMTS-2 Feb 2020 30 Mar 20 70 Feb 2020 6 Mar 20 - - 1
KWSAP Jan 2020 28 Feb 20 15 Feb 2020 12 Mar 20 25 - 1
MCWAP-1 Mar 2020 30 Mar 20 27 Mar 2020 6 Mar 20 - - 1
If the current, positive trend in accounts receivables continues, it is projected that most of TCTA’s projects
would not require any outside funding or liquidity support for the remainder of the 2020/21 financial year. The
exception to this is the VRESAP project, which might require some liquidity support in the first quarter of
2021.
TCTA will keep Noteholders and Lenders updated of any new developments or changes to these projections.
Acronyms:
VRS: Vaal River System Water Resources Development VRESAP: Vaal River Eastern System Augmentation Project
Projects (Incorporating the Lesotho Highlands Water Project MMTS-2: Mooi-Mgeni Transfer Scheme – Phase 2
(LHWP) & Acid Mine Drainage (AMD)) KWSAP: Komati Water Scheme Augmentation Project
BWP: Berg Water Project MCWAP: Mokolo-Crocodile Water Augmentation Project
30 April 2020
Darshana Jeeva, TCTA Sponsor +27 12 683 1331, djeeva@tcta.co.za
Queries: Nyiko Mageza, Treasury Manager +27 12 683 1334, nmageza@tcta.co.za
Media Queries - Wanda Mkutshulwa, Head of Communications +27 12 683 1378, wmkutshulwa@tcta.co.za
Date: 30-04-2020 04:02:00
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