25 January 2000
Issued by: Government Communication and Information System
Today the Minister of Finance, Mr. Trevor Manuel, signed loan agreements to the approximate value of R29,3bn (US$4,8bn) with four international financial syndicates led by the following banks:
Barclays Bank (United Kingdom), Commerzbank/KfW (Germany), Societe Generale (France) and Medio Credito Centrale (Italy.)
The loans will be used to fund the procurement of the military aircraft, ships and submarines for which supply contracts were concluded and announced last year.
The signature of the loans brings to a close a tough and intensive negotiation process which has lasted for more than 12 months. The loans - which have tenors of up to 20 years - are underwritten by the Export Credit Agencies of the countries of origin of the military equipment, allowing the South African Government to take advantage of the very advantageous terms and conditions characteristic of this market.
In addition, in a number of cases the South African Finance Negotiating Team was able to achieve a range of interest rate and currency options which is without precedent for this sort of purchase. The favourable loan terms which were ultimately realised have formed a critical aspect of government's overall effort to ensure that the military purchases are affordable and that any risks related these contracts are manageable. Government firmly believes that these objectives have been achieved.
The financial negotiations were undertaken by a team within the Department of Finance led by one of its Senior Managers, Roland White, advised by Warburg Dillon Read (Financial Advisors) and White and Case (Legal Advisors.) This team formed part of the overall International Offers Negotiating Team, co-ordinated by Jayendra Naidoo and accountable to a committee of the relevant Ministers and chaired by the President.
With the signing of the loan agreements all contract negotiations are concluded and associated processes have been wound up.
For more information please contact Nad Pillay at:
(012) 314 2166
082 553 7980
Fax 012 326 0317
Issued by Government Communication and Information System (GCIS), Pretoria, 25 January 2000