UAE-based telco Etisalat would still be willing to buy 46% of Zain even if the target does not manage to sell its Saudi business Etisalat CFO Salem Al Sharhan told journalists yesterday.
If Zain continues to fail to sell its 25% stake in Zain KSA, “we…
UAE-based telco Etisalat would still be willing to buy 46% of Zain even if the target does not manage to sell its Saudi business Etisalat CFO Salem Al Sharhan told journalists yesterday.
If Zain continues to fail to sell its 25% stake in Zain KSA, “we will not call it a deal breaker”, he was cited saying by Dow Jones. He added that Etisalat expects to complete its due diligence on Zain by the end of this month.
Last weekend, Zain acknowledged that it had not accepted any of the three offers it had received for the unit.
The bidders for the 25% stake were Saudi investment groups Kingdom Holding, advised by RBS, Riyadh Holding and Bahraini incumbent Batelco, advised by Citi.
The sale is a key condition for Etisalat’s acquisition of 46% of Zain, a transaction worth US$11.7bn. Etisalat last weekend stated that it regretted Zain’s decision not to accept any of the three offers.
However, many sources around the deal say that the main hurdle to the Zain/Etisalat deal is disagreement among Zain’s top brass over whether there should be a sale. At least two key board members, who also disapproved of last year’s sale of the company’s African assets to Indian mobile operator Bharti, do not want to exit the Middle East. Both deals were instigated by the Al-Kharafis, an influential shareholder group that controls some 20% of Zain.
Last weekend, Zain also announced that two top executives are to resign, and that 40% of jobs in Kuwait and Bahrain will be axed.
COO Barrak al-Subaith is to step down at the end of the month due to “personal commitments”, which is the same reason given by chief strategy and business development officer Haitham al-Khaled, and also Salah al-Fouzan, who advises CEO Nabil Bin Salama.
It is unclear whether the departures are linked to the sales of Zain KSA or of the 46% stake in Zain Group.
Zain KSA has a reported US$3.9bn in debt, having paid US$6.1bn for the country’s third mobile licence in 2007. The 25% stake has been valued at some US$733-750m.
Credit Agricole and/or UBS has been acting as adviser to Zain on its acquisition by Etisalat and its sale of the stake in Zain KSA.
Al Sharhan confirmed that the US$11.7bn would be raised via a US$6bn bridge loan that would be repaid in 18 months via a bond or sukuk facility, a US$3bn three-year commercial loan that would be repaid upon maturity; and a US$3bn 5-year loan that would be refinanced via a bond or sukuk. He said that revenues stemming from Zain’s assets would suffice to pay back the US$12bn worth of loans.
