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Thelo Rolling Stock Leasing Media Release

Putting Africas railways to work again

Thelo Rolling Stock Leasing is making it easier for governments and businesses to upgrade their ageing rail fleets

Johannesburg [Insert Date] For immediate release Many countries throughout Sub-Saharan Africa find themselves constrained by poor transport infrastructure and the moribund condition of state-owned rail assets says the CEO of Thelo Rolling Stock Leasing (Thelo RSL), Ronnie Ntuli. Thelo RSL, which was established in 2011 and began operating in 2012, is a leading financier of rolling stock in the region.

In South Africa, the countrys ageing rail fleet and the rapidly growing need for more efficient freight and passenger transportation prompted the Department of Transport to develop an integrated national transportation plan (Natmap) in 2010. The R750 million plan intends to facilitate long-term and sustainable socio-economic development through substantially upgrading the countrys rail infrastructure.

Rail transportation is the lifeblood of any economy, says Ntuli, and many governments across the continent recognize the urgent need to upgrade rail networks as well as outdated and inadequate rolling stock. This is especially true in countries where the economy depends heavily on the export of bulk commodities.

It was within this context that a group of highly experienced businesspeople came together to conceptualise and implement an innovative and cost-efficient financing model that would give both public and private users better access to quality rolling stock. From this early initiative, the B-B BEE

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empowered Thelo Group and its operating arm Thelo RSL were born, and the same visionaries that came up with the Thelo business model are today managing and growing the rolling stock business.

A 50:50 joint venture between the Thelo Group and the Industrial Development Corporation (IDC), Thelo RSL procures, finances and supplies new and refurbished rolling stock to its clients in countries throughout Sub-Saharan Africa. This includes locomotives, carriages, wagons and containers, which are supplied to national rail operators, concession holders and freight owners that represent a broad range of industrial and mining corporations.

Our most recently concluded deal is, in fact, a contract to supply locomotives to an international mining company for its operations in Mozambique, says Ntuli.

Further deals that, if finalised, could represent a revenue in excess of US$400 million, are in the pipeline.

Although it is difficult to quantify the potential size of the rolling stock market in Africa, the Thelo RSL board estimates that it is far greater than the company would be able to serve, even if it were to grow its balance sheet by a factor of ten or more, he says.

The high level of demand for rolling stock is evident in the fact that the companys initial capital base of US$140 million had already been deployed. Based on this success and on the robust nature of its business model, Thelo RSL now wishes to raise a further US$200 million in order to meet demand.

The new capital amount will be used to acquire rolling stock to supply clients with which the company already has heads of agreement. It will also provide a platform off which to issue a corporate bond of up to US$300 million in value. The proceeds from this will be used to partially pay down current lenders, finance additional transactions and reduce the cost of capital.

Thelo RSLs mission is to support Africas industrialisation and socio-economic development by providing its clients with cost-effective, reliable and high-quality rolling stock, says Ntuli, and we look forward to making a real and meaningful difference on the continent in the years ahead.

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