Bruce Whitfield:
I saw today that the V&A Waterfront is for sale, the most attractive commercial property in South Africa. Why then is Transnet so keen to sell it. Maria Ramos, the chief executive of Transnet, on the line to us now. Maria good evening.

Maria Ramos:
Good evening Bruce.

Bruce Whitfield:
Why are you selling the V&A Waterfront?

Maria Ramos:
Well it is very simple, we have maintained from the beginning as we have been designing a new strategy for Transnet, it is not part of our core function. So this is just part of our disposals process for our non-core assets.

Bruce Whitfield:
What exactly is for sale, the harbour property that Transnet clearly developed over time. You have developed a very attractive asset and you are looking to flog the buildings, the site the lot?

Maria Ramos:
It is our shareholding in the V&A company.

Bruce Whitfield:
So the V&A company is an entity which Transnet has a stake and various pension funds also have a stake.

Maria Ramos:
Transnet has a 26 percent shareholding and then the Transnet the second defined pension fund which is a Transnet pensions fund which has a 43.6 percent shareholding, the Transnet pension fund which also a defined contribution fund has got a 7.8 percent shareholding and the Transnet retirement fund which is a defined contribution fund which has not yet made the decision about what to do with their stake, which has 22.6 percent, is the other shareholder.

Bruce Whitfield:
Okay, so basically, effectively 80 percent or thereabout of the Waterfront is up for sale. What sort of a buyer is going to be able to afford a stake of this size, because it is not a small property.

Maria Ramos:
Well, that is what we are going to go through the process for. What we did today is announce the process and we basically got a dual process going. One is the competitive trade sale and at some point in that process we will make a decision about whether or not that is going to be the maximum value for the shareholders and if we think that there is an even more attractive return by going the ITA route, we will be doing that. We will go through a two phase process.

In the first phase, we will issue a memorandum of information for which any business who wants to see the memorandum of information is to pay R50 000 which is not refundable and has a kind of confidentiality agreement, they then have to submit indicative offers with a funding plan. And then in the second phase, we will go through a short listing process where we will shortlist bidders and perform a proper due diligence and ask them to submit further offers and then on the basis of that, we will make a decision as to whether or not we will proceed with this trade process of with the ITA.

Bruce Whitfield:
Why do you not just go straight to the ITA? That would be the most lucrative way and speedy of achieving a good valuation for the property.

Maria Ramos:
Yes we have looked at that and this is a big and very attractive asset and we thought, that given what we are trying to do and given what the other shareholders or the pension funds are trying to do, we have a responsibility for making sure that we have accepted both processes and we are in fact getting the maximum value.

Bruce Whitfield:
What do you estimate the value to be?

Maria Ramos:
Bruce, I have been asked this by everybody today and no doubt will be asked that many times, but I don’t know, but all we know is that we are going to look at the bids and we want to make sure that we get the best possible.

Bruce Whitfield:
So you have a price tag no doubt in mind. If you don’t achieve that price tag by going the private route, then you will very well end up listing the V&A Waterfront on the JSE.

Maria Ramos:
Absolutely.

Bruce Whitfield:
As far as Transnet is concerned, you are selling off a range of non-core assets or disposing of non-core assets including, by the end of this year, I think you told parliament last week, SAA will be off the books by the end of the calendar year 2006.

Maria Ramos:
Yes that is the plan.

Bruce Whitfield:
I can understand why you want to relieve yourself of SAA, but what about other assets as well? You want to be a core rail network, I suppose, a rail business. What other assets are there within the portfolio that you are looking to dispose of?

Maria Ramos:
Well we announced a range of things, we have got different categories of things in the agreement that we have signed with the unions. But we are going to be selling our shareholding in equity aviation which we have a 49 percent shareholding there, we have got the Blue Train, that is also going to be sold in the course of this year and all our non-core assets which we had listed are in some part of the process, is to be sold in the course of 2000 or disposed of, not all of them are private sales. Then SAA is the most stagnant. Metrorail will move to government and so, yes, there is a whole range of non-core assets.

The whole idea of Transnet is that they really want to be a sort of bulk freight infrastructure, which is freight rail, our ports and pipelines properly invested in and running efficient and effectively with the right kind of human, and capital, is basically what it needs.

Bruce Whitfield:
Trimming down the business, Maria Ramos, Transnet chief executive officer taking us through some of the details there and not giving a valuation for the V&A Waterfront, but it is up for sale. If you have got some petty cash in the petty cash box, you may want to consider that one.

Bruce Whitfield:
Patrick Ntshalintshali, our market commentator in our Cape Town studio this evening. You have just been listening to Maria Ramos, the chief executive officer of Transnet and the V&A Waterfront, if it was listed, Patrick, if it had got to that stage, would you be interested in buying shares in it?

Patrick Ntshalintshali:
One would have to look at it, look at the valuation and look at it and compare it to the rest of the market, with the properties companies as well. However, that being said, I believe it is quite a great asset in terms of its location, the accessibility, the reachability, the appeal of the asset. I am sure there is a lot of demand for that asset and there must be queue of people wanting to get into that.

Bruce Whitfield:
One would think so. She would not give a valuation on it. But reports we found this evening suggest the value between R3 and R3.5-billion. Perhaps it would take something of a consortium to get together and to actually buy an asset of that size.

Patrick Ntshalintshali:
Yes that is quite a lot, especially for someone who is getting into property for the first time. That could be a big exposure and the lack of diversification could be an issue when it comes to listing the asset and that could come up when people are asking for a bigger discount.

Bruce Whitfield:
Off the top of your head, are there any South African property funds that might be willing to dip their toe into something like that?

Patrick Ntshalintshali:
I am not sure, but looking at what has happened, there has been a lot of corporate activity, that is based in the corporate property market. The share prices have had a very good run, so I am sure they are willing to issue a paper or purchase shares and try and get into such a great asset. Because looking at the long term picture, there can only be demands for people wanting to get into the Waterfront, there is no supply.

Bruce Whitfield:
Yes unless they start doing what the Dutch did in Holland and start building dykes out and taking the land reformation to new records in the Cape Town area of course.