South Africa-based utility ESKOM is facing increased financial pressures as a result of an ongoing court case against its regulator, NERSA. In addition, ESKOM's government guarantee line of ZAR350 billion expires in March 2017 and, although ESKOM has initiated a process to extend it, there is still no decision by the government to extend the line until completion of ESKOM's capital spending program (anticipated in 2023). We think this raises potential risks to the likelihood of extraordinary government support to ESKOM. We are also concerned that ESKOM's capital structure and free cash flow remain at unsustainable levels, even if its liquidity position and operating performance should show some improvement during the current fiscal year. We are therefore lowering our long-term
