Economic entity Municipality of Cape Town
2015 2014 2015 2014
R’000 R’000 R’000 R’000
Economic entity Municipality of Cape Town
2015 2014 2015 2014
R’000 R’000 R’000 R’000
OTHER LOANS 679 931 829 158 665 355 813 463
FirstRand Bank 147 725 158 723 147 725 158 723
A structured 15-year loan to the value of R220 million, of which, R200 million is repayable semi-annually in equal instalments of capital and fixed-rate interest over 15 years, and the balance of R20 million payable in one instalment, together with fixed interest on 30 June 2017. The loan bears interest at a fixed rate of 12,63% per annum. The bullet repayment of the R20 million capital and interest will be made out of the guaranteed investment portfolios of two 15-year sinking-fund investment policies purchased from Momentum Group.
As part of the loan structure, the Entity purchased two 15-year sinking-fund policies from Momentum Group for an upfront premium of R220 million. R20 million of the premium was invested in the guaranteed investment portfolio referred to above. The balance of the premium, i.e. R200 million, was invested in a linked investment (unguaranteed) portfolio. The maturity proceeds of this unguaranteed portfolio were sold in advance to FirstRand Bank for R200 million on the acceptance of the policies. The Entity has ceded and pledged the sinking- fund policies to FirstRand Bank as security for the Entity‟s obligations to FirstRand Bank under the policies and any other debt liability.
DBSA 348 415 444 308 348 415 444 308
Unsecured loans bearing interest at fixed rates ranging between 9,42% and 12,25% per annum, repayable semi- annually in equal instalments of capital, with interest payable on the reducing balance. These loans have various final redemption dates, ranging from 30 June 2015 to 31 December 2022.
ABSA Bank 60 000 80 000 60 000 80 000
An unsecured loan bearing interest at a fixed rate of 10,90%
per annum, repayable semi-annually in equal instalments of capital, with interest payable on the reducing balance. Final redemption on 30 June 2018.
FirstRand Bank 109 215 130 432 109 215 130 432
A structured 15-year loan to the value of R300 million bearing interest at a fixed rate of 12,05% per annum, of which, R74,30 million is repayable semi-annually in equal instalments of capital and fixed interest over 15 years, and the balance of R225,70 million payable in one instalment together with capitalised fixed-rate interest on 30 June 2018. The bullet repayment of the R225,70 million capital and interest will be made out of a 15-year sinking-fund investment policy purchased from Momentum Group.
As part of the loan structure, the Entity purchased a 15-year sinking-fund policy from Momentum Group for a premium of R228,40 million, which was invested in an unguaranteed investment portfolio. The premium is payable semi-annually over 15 years through a series of promissory notes issued by the Entity to Momentum, later sold on to FirstRand Bank and Future Growth. In terms of a put-option agreement, the maturity proceeds of this unguaranteed portfolio were sold in advance to FirstRand Bank for a fixed-option price of R894,60 million, payable on 30 June 2018. The Entity has ceded and pledged the sinking-fund policy to FirstRand Bank as security for the Entity‟s obligations to FirstRand Bank under the put-option agreement and any other debt liability.
Economic entity Municipality of Cape Town
2015 2014 2015 2014
R’000 R’000 R’000 R’000
OTHER LOANS (continued)
DBSA – Claremont Road Bypass Company 14 414 15 609 - -
Interest is charged at a nominal fixed rate of R186 plus 154 basis points per annum.
Repayable in 28 equal six-monthly instalments, commencing on 30 September 2009.
Secured by an agreement of cession from Claremont City Improvement District (CID) Company (association incorporated under section 21) (cedent) over their right and title to the levies collected by the City of Cape Town from the Claremont CID ratepayers in terms of the cooperation agreement.
The cedent, the company and the City of Cape Town concluded a cooperation agreement in terms of which the City of Cape Town undertook to pay to the cedent levies collected from the ratepayers within the Claremont CID.
Voortrekker Road - 86 - -
Instalment sale agreement
ABSA - Brackenfell Business Improvement District NPC 162 - - -
The loan is secured by motor vehicles, bearing interest at 12,25% interest rate and is repayable in monthly instalments over 36 months as agreed upon with ABSA bank.
TOTAL – see Appendix A for more details 6 775 757 7 050 159 6 761 181 7 034 464 The rates of interest payable on the abovementioned structured loans are based on certain underlying assumptions relating to the lenders‟ statutory costs, and the admissibility of deductions by the lenders for income tax purposes in connection with these loans. In the event of amendments to, or interpretations of, the Income Tax Act (Act 58 of 1962) or any other relevant legislation that affect the loan structure costs, the lenders have the right to increase or decrease the future rates of interest payable on the loans over their remaining lives, in order to absorb the increase or decrease in costs.
SHORT-TERM DEBT FACILITIES
The Municipality had the following short-term debt facilities with the Entity‟s main banker:
2015 2014
R’000 R’000
Performance guarantee and/or letters of credit 15 000 15 000
Business travel card 2 000 2 000
Daylight limit 2 000 000 2 000 000
The short-term debt facilities are reviewed annually and can be explained as follows:
Performance guarantee and/or letters of credit
A guarantee issued by the bank is an undertaking that should the Entity fail to fulfil its obligations in terms of a contract or an agreement the bank will pay specific amounts as stated on the guarantee. The monies are due and payable on the written demand from the beneficiary.
A letter of credit is a document issued by the bank, assuring payment to a seller of goods or services, provided that certain documents have been presented to the bank. The documents should prove that the seller has performed the duties specified by an underlying contract, and that the goods/services have been supplied as agreed. In return for these documents, the beneficiary receives payment from the bank that issued the letter.
Business travel card
A card issued by the bank that enables the Entity to obtain goods and services on credit. It entails moneys lent and advanced.
Daylight limit
A daylight limit is a facility that enables the Entity to transact even if there are insufficient funds during that particular day. It entails moneys lent and advanced during that day, provided it is settled by the end of that business day.