Arab National Bank has agreed to extend Zain Saudi’s US$600m loan facility, TelecomFinance has learned.
Zain announced its third quarter results to the Saudi stock exchange yesterday, revealing net losses of SAR493m (US$131.46m) compared to SAR484m…
Arab National Bank has agreed to extend Zain Saudi’s US$600m loan facility, TelecomFinance has learned.
Zain announced its third quarter results to the Saudi stock exchange yesterday, revealing net losses of SAR493m (US$131.46m) compared to SAR484m (US$129.1m) in the same quarter last year.
The telco group stated that it was “in very advanced negotiations” with a syndicate of banks and potential new investors to refinance a US$2.4bn loan.
Abdulaziz Jawad, investor relations specialist at Zain, told TelecomFinance that Arab National Bank had agreed to extend its part of the Islamic murabaha facility.
“We were planning to renew the loan anyway, but we asked the banks to postpone the renewal date so that we could provide them with a new business plan with more achievable figures,” he said. “We have seen the banks’ appetite so there is no problem there. We have a US$600m facility with ANB and they want to increase it.”
Zain recently took out a rights issue which reduced their debt from US$2.6bn to US$2.4bn and took them out of negative equity.
“Everybody knew that Zain couldn’t repay the debt so would have to refinance,” an analyst familiar with the company told TelecomFinance. “The company is still under considerable stress in the current environment and the recent Q3 results have not helped.
“The loan will have to be refinanced by a syndicate as I don’t think any one bank would take that on. It will most likely be guaranteed by Zain Kuwait.”
Mahmood Akbar, analyst – equity research at NCB Capital, said he thought interest rates for the refinanced loan could prove challenging for Zain. “I think they will find it difficult to extend the loan without higher interest rates, as it is a refinancing deal and the outlook is weak,” he said. “However, they cannot afford higher interest payments and I think the company will face difficulties in the near future.”
