Zain closes sale of African assets to Bharti

Zain has announced that it has closed the sale of Zain Africa to India’s Bharti Airtel, in a transaction worth US$10.7bn. This transaction, which excludes the company’s assets in Sudan and Morocco, gives Zain’s African portfolio a US$10.7bn enterprise…

Zain has announced that it has closed the sale of Zain Africa to India’s Bharti Airtel, in a transaction worth US$10.7bn. This transaction, which excludes the company’s assets in Sudan and Morocco, gives Zain’s African portfolio a US$10.7bn enterprise value.

For Zain, the transaction will bring aggregate net cash proceeds of US$8.968bn. The operator said it had so far received US$7.868bn from Bharti, with US$400m due in six months assuming certain milestones are achieved and the remaining US$700m due a year after completion.

With the proceeds, Zain has fulfilled its debt obligations, repaying the US$4bn revolving credit facility secured in 2006, and now plans to use the remainder to pay dividends and attend to “other corporate matters”.

Under the terms of the original agreements, Zain has licensed the use of the ‘Zain’ brand and related trademarks to Bharti in all 15 African operations for an interim period.

Zain chairman Asaad Al Banwan said the deal “crystallises the significant value we have created for our shareholders over the last five years”, adding that the board would look to use the remaining proceeds to “further enhance value for all stakeholders.”

Zain Group CEO Nabeel Bin Salamah commented that the company would now “focus on its highly cash generative Middle Eastern operations, investing in new growth opportunities in our existing markets”.

Zain was advised by banks UBS and BNP Paribas, with Linklaters providing legal advice.