The US International Development Finance Corporation (DFC) is investing in a South African property developer that would help the company deliver low-income housing units in priority urban development areas.
The American development finance institution is investing US$20 million in Johannesburg Stock Exchange-listed Calgro M3, the developer said on Tuesday.
The funding facility is for seven years. The initial anticipated interest rate on the debt is 9.12%. Interest rates will be finalised on the date of each drawdown.
DFC, formerly known as OPIC, will make no more than one disbursement in each fiscal quarter and a maximum of four overall throughout the duration of the funding facility. It will disburse at least US$5 million each time.
Calgro has 30 months to fully draw on the funding facility and will have to make the initial withdrawal within the first 12 months. It will have to repay the amount in seven equal instalments commencing in the fourth year of the loan.
Currently, 62.8% of Calgro’s borrowings comprise funding obtained from local and international development finance institutions with loan terms of four to six years. Its remaining debt is via floating rate notes.
The company has undertaken a major debt restructuring drive to ease balance-sheet pressure. This has resulted in debt being repaid in the past 12 months amounting to R507 million, with bulk of the amount redeemed early.