South African energy company in serious trouble

Renergen has breached its debt covenants and triggered default events, which point to a company facing severe financial challenges.

Renergen, which promoted itself as a company focusing on alternative energy solutions, was listed on the Johannesburg Stock Exchange (JSE) in June 2015.

Its main asset is the Virginia Gas Project, which the company claims could produce large quantities of liquid natural gas (LNG) and liquid helium (LHe).

Renergen and its chief executive, Stefano Marani, have made bold promises to investors and shareholders about their plans.

In May 2016, Renergen CEO Stefano Marani said they had signed a deal with Afrox and would be producing helium in the 2018/2019 financial year. This did not happen.

In August 2019, the company told investors it would be producing 350 kg of LHe daily by 2021. This deadline came and went without any liquid helium production.

In March 2023, Renergen said its Virginia Gas Project could generate an estimated R5.7 billion to R6.2 billion in EBITDA once the Phase 1 and 2 plants are fully operational.

Marani said they expect to produce 2500 GJ to 2700 GJ of LNG per day and between 300 kg and 350 kg of liquid helium per day from the phase 1 expansion.

According to FNB, Renergen was expected to produce 310 kg of helium and 50 tonnes of LNG per day by the first half of 2024.

This translates into around 9.3 tonnes of LHe and 1,500 tonnes of LNG per month, or 9,150 tonnes of LNG and 57 tons of LHe every six months.

Renergen is nowhere near these targets. Its latest financial results only referenced LNG production volumes. There is no mention of LHe sales.

Renergen’s results for the year ended 28 February 2025 showed an 80% increase in revenue to R52.1 million.

Renergen’s LNG sales volumes increased from 2,660 tonnes in 2024 to 4,633 tonnes in 2025. LNG prices averaged R225/gigajoule in 2025 compared to R217/gigajoule in 2024. 

However, this significant revenue increase was a drop in the ocean when compared to the rapid increase in costs, resulting in a huge loss.

The company’s total comprehensive loss attributable to ordinary shareholders increased from R110.2 million in 2024 to R235.8 million in 2025, a 114% increase.

The company attributed this to several factors, including the implementation of its operational strategy, which required Renergen to incur costs such as fuel, lubricants, utilities, and labour.

The company also reported a 16% decline in its tangible net asset value per share, which fell from R8.40 in 2024 to R7.03 in 2025.

This decline was attributed to decreases in cash and cash equivalents and restricted cash, as well as operational losses incurred by the group.

Renergen in serious financial trouble

Renergen’s financial statements revealed that the company is facing serious financial challenges, which have caused it to breach its debt covenants and trigger default events.

It owes money to several institutions, including the United States Development Corporation (DFC), Standard Bank, and the Industrial Development Corporation of South Africa (IDC).

This is not all. Renergen also entered into an interest-free loan agreement with Molopo for R50 million in 2014, which is now subject to litigation.

The R50 million Molop loan had a maturity period of 10 and a half years, after which it would start drawing interest.

The loan had to be paid off by 31 August 2024, but Renergen failed to do so. Due to disputes over a breach in the loan agreement, Molopo took Renergen to the South African High Court.

Molopo is seeking to cancel the loan agreement, which would most likely mean an immediate repayment of the loan plus all the accrued interest.

Renergen stated that the soonest High Court hearing is only in 5 years, and it continues to report the loan as a non-current loan.

United States Development Corporation – R744 million

The United States Development Corporation (DFC) lent Renergen $40 million, which was paid to Renergen from 2019 to 2021 and is repayable with quarterly instalments from 2022 to 2031.

Renergen had to make a R20 million quarterly repayment in February 2025. However, it did not make this payment and officially defaulted on this loan. 

Renergen also failed to report changes in ownership and changes in material contracts to the DFC, which triggered a default.

Renergen further failed to report the Molopo litigation to the DFC, which also triggered a default event under the loan agreement. It, therefore, had multiple default triggers on the DFC loan.

The DFC loan is securitised by Renergen’s construction assets – its LNG and LHe plant. This means that the DFC could most likely have seized all of Renergen’s assets by the default events.

The DFC agreed to waive the default on the following conditions –

• Renergen pays the missed instalment and tops up its emergency reserve, as per the loan agreement
• There is no court ruling against Renergen or Tetra4 in the Molopo case
• Finish building the Virginia Gas Project on time
• Renergen should inject enough of its own capital into Tetra4 as per the loan agreement
• Confirm the recent Mahlako Energy ownership changes with the required documentation

Additional debt covenants will come into effect by August 2025, requiring, among other things, a debt-to-EBITDA ratio between 1 and 3 times and a cashflow coverage ratio of at least 1.3 times.

Renergen reported an EBITDA of -R199 million and cash flow from operations of -R140 million.

It therefore seems highly likely that Renergen would also breach these additional debt covenants by August.

Industrial Development Corporation of South Africa – R161 million

Renergen entered into a R161 million loan agreement with the Industrial Development Corporation of South Africa (IDC) in 2021 at a ‘prime rate + 3.5%’. This equates to 14.5% at current rates.

Like the DFC loan, this loan is securitised by Renergen’s under-construction assets, essentially the Virginia Gas Project.

It includes the debt service reserve account and Renergen’s land holding all of its gas deposits.

There is still R160.6 million outstanding on the IDC loan, and the interest accrued for the 2025 financial year was R26 million, amounting to half of Renergen’s total revenue.

Renergen reported that the default event with the DFC resulted in a cross-default with the IDC. This means that Renergen also defaulted on its IDC loan.

This suggests the IDC loan likely includes a cross-default covenant, meaning that if Renergen defaults on any other debt, it would also automatically trigger an IDC default event.

Standard Bank loan – R155 million

Renergen entered into a R155 million loan agreement with Standard Bank that is repayable at the earliest of the Nasdaq IPO date or 30 August 2025.

The loan carries an interest rate of JIBAR plus a variable rate, which was 20.70% for the 2025 financial year.

The loan is securitised by a third-ranking pledge, after the DFC and the IDC, of all of Renergen’s assets under construction (the Virginia gas project).

The security also includes Renergen’s land, its global business bank account, all the shares Renergen holds in the VGP (Tetra4), and all the shares held by Marani and COO Nick Mitchell.

The Molopo litigation, Renergen’s failure to top up the required equity capital into the VGP (Tetra4), and the default on the DFC loan, all triggered default events on the Standard Bank loan.

Standard Bank agreed to waive the default event in the Molopo litigation. However, it did not waive the default related to Renergen’s missed equity investment.

The required equity injection is a condition set by lenders to ensure the company maintains a healthy balance between debt and equity financing.

It prevents companies, such as those borrowing from Standard Bank, from relying solely on debt to fund their operations.

This means that Renergen is still in default, and Standard Bank could lay claim to its pledged assets if Renergen is not able to make the required equity investment into the VGP.

Renergen still has R169 million outstanding of its Standard Bank loan, and accrued R17 million in interest for the 2025 financial year.

Renergen urgently looking for more money

The breached debt covenants and triggered default events show that Renergen is in deep financial trouble.

It recorded a total comprehensive loss and reported a gross loss. Unless there is a big turnaround, it will continue to lose money while operating.

Additional debt covenants will kick in by August, and Renergen is already struggling to resolve its current debt covenant breaches. This creates a really bad situation.

If Renergen’s debt holders decide to act on their default rights, Renergen could lose all its assets, and the business could be liquidated to pay off the debt holders.

If this happens, it is highly unlikely that shareholders would receive a penny. It would be a disaster for Renergen and the people who backed the company.

David Shapiro from Sasfin Securities warned that he could not see Renergen making it and would not advise people to buy the stock.

“It will take a huge amount of money and effort to get this thing productive to a point where you are making big profits,” he said.

“The more I look at Renergen, the more nervous I get about the operation. Sooner or later, they need to get big money.”

Marani and Mitchell seem to be targeting the Middle East to get a big investment and address its dismal financial situation.

Marani told Oil and Gas Middle East that Renergen creates significant opportunities for investment from the Middle East.

He said Renergen aligns with the Middle East’s objectives around economic diversification, energy sustainability, and securing access to critical minerals.