Complex Made Simple

RVR completes final drawdown on $164m senior debt facility, inks new freight contracts

Africa Railways, a core subsidiary of African infrastructure and industry leader Qalaa Holdings (CCAP.CA on the Egyptian Exchange; formerly known as Citadel Capital), has completed drawdown of the final US$ 69.6 million of a US$ 164 million senior debt facility, which it raised through leading global and East African financiers in 2011 to fund the five-year turnaround of Rift Valley Railways. The final drawdown on the facility comes as RVR continues to ink important new freight contracts, install satellite-enabled train operating technology and boost freight-haulage capacity.

Institutions participating in the US$ 164 million senior debt package include African Development Bank (AfDB); International Finance Corporation (IFC); KfW Entwicklungsbank (The German Development Bank, KfW); FMO (the Netherlands development bank); Kenya’s Equity Bank; ICF Debt Pool; Belgian Investment Company for Developing Countries (BIO).

“Alongside a strong management team, the financing provided by these financial institutions has been key to turning around the fortunes of Rift Valley Railways,” said Qalaa Holdings Managing Director Karim Sadek. “A portion of the proceeds from the drawdown will be used to finance ongoing capex projects including the rehabilitation of the 366 kms of the Nairobi-Kampala section of the line, as well as refurbish a further 1,400 wagons in the existing fleet. Total capex spending this year will exceed US$ 100 million,” he added.

Freight clients in particular are benefitting and taking advantage of what Sadek called “more investment in revitalising the Kenya-Uganda railway system in the last 26 months than in the previous 26 years,” with high-profile companies signing new contracts amid improved speed, reliability and safety records along the line.

Among them is Vivo Energy Kenya, which markets Shell-branded fuels and lubricants. Vivo announced earlier this month that it plans to double in the near term the 4 million liters of diesel per month it ships to Nairobi and Uganda from the port of Mombasa thanks to a program that will see 255 disused fuel-ferrying tanks brought into service at RVR workshops in Nairobi, Mombasa and Kampala. Additional tank wagon acquisitions by RVR will triple its fuel-ferrying capacity over the next year. Purpose built saddles designed by RVR engineers also enabled Roofings Rolling Mills, a major Uganda based steel manufacturer, to shift most of the transportation of heavy steel coil imports from road to rail.

In the 2013 capex program, the rehabilitation of 73 km of track linking Nairobi and Mombasa at a cost of US$ 20 million and rebuilding of nine culverts between Busembatia and Jinja resulted in the lifting of speed restrictions in critical sections of the line thereby slashing transit times between the port and Nairobi by six hours and Tororo to Jinja by 10 hours. In addition, RVR launched a multi-million-dollar technology upgrade that saw global positioning system (GPS)-based software introduced on the trains allowing RVR track operators to centrally control the movement of trains and cargo along the railway track. The automated train warrant (ATW) software allows online visualization from an operations control center in Nairobi which pinpoints the precise location of trains along the railway replacing manual management of crossovers at railway stations with satellite-enabled self-switching movement of trains.

In October 2013 RVR also completed the first phase of the rehabilitation of 500 kilometers of track between Tororo in Eastern Uganda and Gulu in the north, ending two decades of disuse.

In April of this year Africa Railways acquired an additional 34% stake in RVR from Transcentury Limited, a Nairobi-listed infrastructure company, raising its total ownership stake to 85% with the remaining 15% being held by Bomi Holdings.

Notable is that Qalaa Holdings (formally Citadel Capital) has concluded a successful rights issue to bring its total paid-in capital to EGP 8 billion. The transaction was a major landmark towards the company’s transformation into an investment holding company with a focus on Transportation & Logistics, Energy, Agrifoods, Mining and Cement. As part of the transformation and to reflect its new corporate identity, the company rebranded itself as “Qalaa Holdings”