Namdeb in N$650 million overdraft

GOVERNMENT has provided a N$325 million surety to Namdeb to renew its N$650 million revolving overdraft facility with local banks.

Inge Zaamwani-Kamwi, Managing Director of Namdeb, confirmed to The Namibian that Namdeb had sought ‘letters of comfort’ from its shareholders in order to maintain its overdrafts with all four commercial banks. Such surety is provided in the ‘unlikely event of Namdeb being unable to pay off the overdraft,’ she said.The Namibian Government and DeBeers each holds 50 per cent shareholding in Namdeb.She said Namdeb is still in discussion with the banks, adding that some have already approved the renewal of the company’s overdraft.While Namdeb’s External Affairs and Corporate Communications Group Manager, Hilifa Mbako, called it a ‘letter of support’ without any monetary value, the Permanent Secretary in the Ministry of Mines and Energy, Joseph Iita, said the two shareholders each provided an equal guarantee of N$325 million to the banks to renew Namdeb’s overdraft. Iita said because of the current global financial crisis local banks needed a guarantee that Namdeb could afford the more than half-a-billion overdraft.Disputing reports that Government had not come to the table with a full 50 per cent surety on the overdraft, Zaamwani-Kamwi said Government had been prepared to stand by its 50 per cent shareholding in terms of the size of the surety provided, and that a ‘letter of comfort’ had been issued to Namdeb to give the go-ahead in renewing its overdraft facilities. In a media release issued yesterday, Mbako denied that the company either sought a ‘bailout or guarantee ranging from N$150 million to N$500 million in order to secure business cash flow’. ‘This is grossly inaccurate, as no such bailout or guarantee has been solicited or made available to Namdeb.’Namdeb’s 2007 financial results indicate a net bank overdraft amount of N$340 million.What was solicited, however, as Zaamwani-Kamwi and Iita have indicated, were ‘letters of support’ from the company’s shareholders, De Beers and the Government, ‘underscoring their full confidence in the business of Namdeb’ and giving their full backing to management ‘under the spectre of the worst global recession’.Zaamwani-Kamwi and Iita said given the ongoing financial crisis, the banks wanted surety to back this revolving overdraft.Mbako said the ‘letter of support’ was a ‘special case’ related to the economic downturn. With the ongoing financial crisis that has seen Namdeb cut production and embark on job-shedding plans, the future of one of the country’s largest employer appears to be on shaky ground.Asked whether Government’s inability to provide the combined N$650 million to the banks would have resulted in Namdeb’s liquidation, Iita said ‘I don’t see Namdeb liquidating,’ adding that he remained optimistic about the future of diamonds in Namibia, despite not knowing for how long the global financial crisis would last. Zaamwani-Kamwi agreed that liquidation would ‘not necessarily’ have been faced, saying that the company was avoiding this at all costs. The country has already suffered some hard blows in the mining industry, which contributes about 20 per cent to the country’s GDP. With Namdeb’s significant production cuts, revenue from the mining industry is bound to decrease significantly. Namdeb, one of the country’s largest contributors to GDP, pumped N$633 million in tax into the State’s coffers in 2007. But Iita said while there would be reduced revenue to the State, ‘with good fiscal management Namibia will be able to sail through the crisis’.nangula@namibian.com.na