South African transport utility Transnet on Wednesday launched the sale process for the Blue Train — the group’s hotel-on-wheels train.
The disposal is part of Transnet’s transformation into a focused freight transport and logistics company.
In terms of the competitive public-bidding process, launched on Wednesday by Transnet group chief executive Maria Ramos, investors are being invited to express their interest to Standard Bank, Transnet’s transaction advisers.
Potential bidders will be furnished with an expression of interest (EOI) pack incorporating high-level information on the Blue Train, a list of questions for potential investors and a non-disclosure agreement (NDA) to sign.
Investors seeking to acquire the Blue Train will be required to answer the questions contained in the EOI pack and make a pre-qualification submission to Standard Bank.
Consortiums that satisfy the pre-qualification criteria will be required to sign an NDA, after which they will receive an information memorandum on the Blue Train, enabling them to submit non-binding bids.
Upon receipt of non-binding bids, a shortlist of preferred bidders will be selected based upon the merits of the bids submitted, Transnet said.
The shortlist of preferred bidders will be given access to a data room in order to undertake a due-diligence exercise prior to finalising and submitting binding bids, after which the successful bidder will be selected.
The pre-qualification criteria includes an ability to obtain and maintain an operating licence, or plans to acquire this ability, a requirement to operating the Blue Train, to demonstrate ability to fund the transaction, or access to such funding, as well as to ongoing operational funding.
In addition, there must be the inclusion, or plans for the inclusion, of a black economic empowerment (BEE) partner/shareholder at a minimum shareholding level of at least 12% of shares issued. This applies to all potential acquirers, Transnet said.
The BEE shareholding/partnership need not be formally in place at the closing date for registration of interest or non-binding bid stage, although it will be a necessity at the effective date of the transaction, Transnet noted.
“The Blue Train is one of the best known brands in our country. It is well recognised in the tourism industry. Transnet is not selling the Blue Train as a commentary on it as an investment case — we’re doing so because it no longer fits the vision of a freight-transport company,” said Ramos.
“Our future lies in promoting economic growth by moving millions worth of volumes in bulk freight, not people. The degree of unsolicited interest from prospective buyers testifies to the fact that this is an interesting investment proposition.”
Commenting on the preferred buyer, Ramos said: “We want the best possible buyer; an investor with a vision for the business; not necessarily one with rail experience, though of course that would be an advantage”.
As has been the case with all the disposals, Transnet has asked auditing firm KPMG to audit the governance process to ensure consistency, transparency and fairness, as well as that the highest standards of corporate ethics are adhered to.
“It’s vitally important that participants have confidence in the integrity of the process. We have invested so much in ensuring that the integrity of our process is unimpeachable,” she said.
Both sets of the Blue Train are up for sale. One is currently undergoing repairs after being damaged in an accident last year.
“Our goal is to also use the disposal exercise to advance the cause of meaningful black economic empowerment”, she said.
During the bidding process, Transnet will not be issuing further communication to ensure that interested bidders have similar levels of access to information. Bidders are expressly discouraged from contacting Transnet employees. Those who do so, risk being disqualified, Transnet added.
All communication during this period should be addressed to the transaction advisers, Standard Bank. — I-Net Bridge