Media Room

Press Releases 2010

IDC allocates R3.1 billion to distressed companies

At the onset of the economic crisis in 2008, the Industrial Development Corporation (IDC) realised that South Africa would not be spared the effects of the recession. Proactively, it formed a response to assist companies that were impacted negatively by the recession. As a result, the IDC announced that they had set aside R6,1 billion to support companies in distress.

One of the main aims of this fund is to assist companies that were successful before the onset of the economic crisis to withstand the impact of the recession and have the ability to continue growing once economic conditions improve. Meer comments, “Our focus is on businesses that have the potential to emerge from the crisis. One of our primary objectives is to create and preserve permanent jobs as efficiently as possible.”

To date, approximately R3.1 billion has been committed to distressed businesses in 53 transactions. Divisional Executive: Industrial Sectors , Shakeel Meer comments, “Approximately 70% of the disbursed funding has been allocated to companies in the metals fabrication, motor, clothing and textiles, mining and forestry sectors. We estimate that over 17 500 jobs will be created and saved as a result of this assistance. ”

Thus far, the fund has mainly assisted the mining and primary metals industry as these sectors were highly affected by the decline in commodity prices. The fabricated metals, machinery and motor vehicle industries received the third largest portion of funding to date as these were impacted by the slowdown in consumer spending on luxury goods. Other industries that received a large portion of distress funding were the forestry, sawmilling and transport industries.

The role that IDC plays in these transactions goes beyond that of a financier. IDC’s participation in the process frequently involves intense negotiations, thus giving comfort to other partners in the business. The additional funding provided gives companies the lifeline they need to implement strategies to turnaround their operations.

Throughout this economic downturn, the IDC continues to provide support for existing clients through advice and restructuring of funding facilities. “Furthermore, we are hosting various workshops and other forums throughout the country in an attempt to advice and partner with businesses in distress. These will afford entrepreneurs the opportunity to assess their options and understand how the funding works,” says Meer.

Ends

Notes to Editors:
The IDC is a self-financing, South African state-owned national development finance institution that provides finance to promote industrial capacity development. Its primary objectives are to contribute to balanced sustainable economic growth in Africa and to the economic empowerment of the South African population, thereby promoting the economic prosperity of the African continent


Issued on behalf of: Kesebone Maema
Head: Corporate Communications
Tel: +27 11 269 3891
Cell: +2778 801 4072

Mandla Mpangase
Public Relations Manager
Tel: +2711 269 3282
Cell: +2782 591 827

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