Saudi Telecom Company (STC) has reached an agreement with creditors of its Indonesian mobile subsidiary Axis to refinance the latter’s US$1.2bn loan, Reuters reported citing sources aware of the situation.
Approximately 90% of the facility will…
Saudi Telecom Company (STC) has reached an agreement with creditors of its Indonesian mobile subsidiary Axis to refinance the latter’s US$1.2bn loan, Reuters reported citing sources aware of the situation.
Approximately 90% of the facility will reportedly be repaid using proceeds from the sale of Axis to rival Indonesian operator XL Axiata.
In mid-August it was suggested that several banks, including Deutsche Bank, HSBC and China Development Bank, were hesitant about restructuring the US$1.2bn loan as they feared losses of up to US$600m.
Axis secured the shariah-compliant loan in 2011 but has since seen its performance decline and the Indonesian operator is now in breach of some of the loans’ terms.
STC therefore asked lenders to restructure the facility in order to reflect its true value of US$600m-US$800m and hired Moelis to help it in the negotiations.
It had been speculated that the situation could disrupt STC’s plan to offload Axis, as the Saudi operator needs the consent of the lenders. But according to Reuters, the sale may now be the solution for STC to repay the loan.
Over the last few weeks, STC, which has an 80.1% direct stake in Axis, has been in talks to sell the Indonesian unit to XL Axiata, controlled by Malaysia’s Axiata. The deal recently received approval in principle from the communication ministry.
STC, which is reportedly advised by Lazard, opted for a sale following poor performance of the business, which posted SR226.4m (US$60.3m) in revenues for the first three months of 2013.
Axis – a medium-sized carrier with an estimated value of about US$1bn including debt – operates in a highly-competitive mobile market, home to 10 companies.
STC and Axis were not immediately available for comment.
