Zain Saudi Arabia, the country's third mobile operator, signed a two-year refinancing agreement worth 2.25 billion riyals ($600 million) to help its capital projects and meet previous obligations.   

The firm signed the Islamic financing agreement with Saudi banks including Arab National Bank and Banque Saudi Fransi, it said in a statement on Tuesday.

"Zain Saudi Arabia completed a refinancing agreement, which complies with sharia laws, on April 11... That is to meet its previous obligations and finance a number of the firm's capital projects," the statement issued to Saudi bourse stated.   

The deal is a Murabaha, the firm said. Under a murabaha deal, an Islamic bank buys an asset from a third party and sells it to its customer at cost plus profit.

This allows the bank to extend financing without charging interest, which is forbidden by Islamic law.

Zain Saudi Arabia, which is 25-percent owned by Kuwait's Zain, became the country's third  mobile operator in 2008 after paying a $6.1 billion entry ticket.   

Saudi's Kingdom Holding and Bahrain's Batelco are bidding to buy Zain's 25 percent share in the Saudi firm.

Offloading the 25-percent holding in Zain Saudi was the pre-requirement of a $12 billion takeover of parent Zain by the UAE's Etisalat. The deal fell through last month after Etisalat walked away. Yet Zain is still pursuing the Zain Saudi stake sale, despite Etisalat withdrawing its offer last month, citing Zain's divided board and regional unrest. - Reuters