Zain Saudi Arabia (Zain KSA) is planning to complete a $1.6bn rights issue by mid-June, leaving the company with just a few weeks to finish off a $2.5bn loan refinancing.

At a meeting with banks in Dubai in mid-March, the company said it was planning to start marketing the rights issue in early May and complete the deal in June. According to sources close to the Saudi telecoms firm, the completion of the rights issue is one of the conditions precedent for the company’s lenders to agree to a $2.5bn debt refinancing of a loan due in late July.

“The rights issue has to be completed before the loan is refinanced,” says one banker close to the company. He adds that the company is expected to start approaching banks for commitments to the new loan “soon”. Talks with lenders for the refinancing have already started, according to bankers in Saudi Arabia.

The rights issue will be split between a $900m conversion of shareholder loans into equity and $900m of new money raised from the Saudi Stock Exchange (Tadawul).

The local Al-Rajhi, Banque Saudi Fransi, and France’s Credit Agricole have been appointed to arrange both the rights issue and the loan refinancing.

Zain KSA did not respond to requests to comment.