The roughly 250 000 minibus taxis on South African roads provide transport for an estimated 15 million commuters a day, but taxi operators are struggling to repay debt.
SA Taxi, the minibus financing unit of JSE-listed Transaction Capital, may need to be"socialised" to prevent it from failing under a R16.7 billion debt burden, a scenario that could have severe implications for the broader economy. As it stands, SA Taxi's income stream is insufficient to meet its debt obligations, which has prompted it to begin negotiations with its lenders to restructure at least R5.3 billion in debt, a process that must be concluded by June 2024 when it expects to run out of money to continue disbursing loans to minibus operators. If restructuring talks fail, SA Taxi's very existence may be in peril, but it could also have severe implications for lenders exposed to the remaining R11.
"Ultimately, SA Taxi may need to be socialised or absorbed by another business with a significantly lower cost of capital because I don’t see a commercial case for saving the business within Transaction Capital," Daniel King, head of fixed income at Merchant West Investments, told News24."As far as we can tell, the SA Taxi part of Transaction Capital is worth zero.