Kuwaiti telecoms firm agreeing pricing with banks before syndication launch
Kuwait telecom’s company Zain is close to launching the syndication of its $1.2bn loan deal and is in final negotiations with banks on pricing.
Bankers close to the deal say that syndication of the loan should be launched in February. The loan will be used to refinance an existing deal.
Pricing is still under negotiation with the banks appointed to lead the syndication, but is understood to start at about 100 basis points above the London interbank offered rate (Libor) for a $400m one-year tranche and 160 basis points above libor for a $800m one-year tranche, with the option for two 12-month extensions. Banks will be invited to lend either $25m, $50m, $75m or $100m to the transaction.
|First quarter 2009||74.5|
|Second quarter 2009||58.4|
|Third quarter 2009||42.4|
|Fourth quarter 2009||35.94|
|First quarter 2010||54.4|
|Second quarter 2010||92.4|
|Third quarter 2010||89.5|
“Pricing at this level could be a tough sell, but a lot of banks like telecoms at the moment so it should get some strong interest,” says one banker.
The last time the company borrowed – a $2.5bn Islamic loan raised for its Saudi Arabian subsidiary in 2009 – it paid more than 400 basis points above Libor for the deal.
Six banks were appointed to lead the latest deal in late 2010, France’s BNP Paribas and Credit Agricole, the US’ Citigroup, National Bank of Kuwait, the UK’s Standard Chartered, and Germany’s WestLB.
The deal is expected to go ahead regardless of the progress made on an acquisition of the company by the UAE’s Emirates Telecommunications Corporation (Etisalat). Due diligence for that deal is expected to be concluded by the end of February, according to Etisalat.
If Etisalat’s $12bn buyout of the Kuwaiti firm goes ahead, the UAE telecoms firm has said it will finance the deal with bank loans, some of which would be refinanced through bond deals.
Saudi Arabian investment firm Kingdom Holding, owned by Prince Alwaleed bin Talal, has offered to buy Zain’s Saudi unit, but did not specify an offer price.
Local regulations mean that if Etisalat acquires Zain, it could have to sell the Saudi subsidiary as it already hold a stake in Mobily, another Saudi telecoms firm.
Qatar’s Qtel and Bahrain’s Batelco have also shown an interest in Zain Saudi, but neither has submitted an offer. Kingdom Holding’s offer is valid until 6 February 2011.