MegaFon has signed two credit facility agreements worth a total US$600m with China Development Bank. The two groups agreed and announced these in September during a state visit by Russian president Vladimir Putin to China.
MegaFon (MCX:MFON) has signed two credit facility agreements worth a total US$600m with China Development Bank (CDB). The two groups agreed and announced these in September during a state visit by Russian president Vladimir Putin to China.
They comprise a US$300m six-year facility to refinance existing debt and a US$300m eight-year facility to finance equipment purchases from Huawei.
The company described the transactions as “a major step in developing its relations with CDB as this is the first facility with a purpose extending beyond equipment purchases, thus significantly broadening MegaFon’s access to sources of debt refinancing.”
New RCF
MegaFon also said it had signed a new five-year RUB30bn (US$440m) revolving credit facility with Sberbank, with proceeds to be used for general corporate purposes.
MegaFon has so far drawn a RUB15bn (US$220m) tranche, which it must repay within three years at a fixed interest rate. Proceeds of the loan will be used to refinance what the company described as its more expensive ruble-denominated debt due in 2016.
The new financing, Megafon said, will allow it to substantially reduce overall debt service cost and further extend maturities.
CFO Gevork Vermishyan said: “We are pleased to announce these recent steps taken in our programme of debt portfolio optimization and we appreciate the support of our long-term partners, CDB and Sberbank. These agreements will allow us to preemptively extend the average life of our debt portfolio and significantly reduce 2016 refinancing risk as well as the risk of interest rate hikes. And with the first-ever refinancing facility from CDB we receive even more flexibility in terms of our debt management and diversification”.
