Ooredoo secures $12bn loan for Maroc Tel bid
Doha, April 21, 2013
Qatar's Ooredoo, formerly Qatar Telecom, has lined up a loan of up to $12 billion from a group of 10 banks to support its bid for Vivendi's stake in Maroc Telecom, several bankers working on the deal said.
The loan is being provided by JP Morgan, Qatar National Bank, Morgan Stanley and HSBC, as well as Barclays, Deutsche Bank, Royal Bank of Scotland, Bank of Tokyo Mitsubishi, Development Bank of Singapore and Citigroup, two bankers close to the deal said.
Vivendi wants to sell its 53 per cent stake in the Moroccan telecom cmpany to help reduce its debts - a deal seen as more critical since Vivendi failed to sell video game firm Activision Blizzard and Brazilian telecom unit GVT as part of a much-heralded strategic shift.
Potential bidders need to show they can come up with cash to cover the $6 billion market value of the stake, as well as fund the buy-out option which minority shareholders must be offered.
Ooredoo's finance package also includes funds in case the Moroccan government decides to sell its 30 per cent stake in the telecom - although it is currently unclear whether it would want to divest its stake in a strategically-important sector.
A consideration in Ooredoo's thinking is a February 22 note from Standard & Poor's, warning that it could downgrade the firm's A rating by one notch if it took on too much debt to fund future acquisitions.
That may mean that Ooredoo funds part of any acquisition with its own cash - it had SR14.8 billion ($4.1 billion) at the end of 2012 - or through equity, having raised $1.9 billion in a rights issue last year to support stake hikes in Iraq's Asiacell and Kuwait's Wataniya.
One of the two bankers said Ooredoo had lined up a loan of up to $12 billion to cover the full purchase price, but the final size could be lower.
Three different bankers who are also working on the deal said Ooredoo asked banks to commit at least $1 billion each from which it will take the necessary amount, adding some had put up more.
Ooredoo was not immediately available for comment.
The Qatari firm is battling with the UAE's Etisalat over the Maroc Telecom stake, after South Korea's KT Corporation dropped out of the race, sources told Reuters on Monday.
Etisalat is set to sign an $8 billion loan facility next week with as many as 16 banks to help fund its stake bid, bankers told Reuters on Wednesday.
Those bidding for the stake need to submit a binding bid by April 22.
JP Morgan Chase is advising Ooredoo on the bid, while Qatar National Bank is administering the finance package.
A number of options were being considered for the financing structure, including a short-term loan to be refinanced later or a long-term loan and a bond, either to fund the acquisition itself or to take out loan debt later, the three separate banking sources said.
The pricing on the loan is expected to be favourable to the company, they said. "Pricing is very tight as you would expect from a top tier name but you still see banks willing to fund," said one.
Ooredoo last tapped the bond market in January, when it raised $1 billion from a two-part issue of 15-year and 30-year paper. The former was trading to yield 162.5 basis points over z-spreads, with the latter at 182.2 basis points over z-spreads at 1515 GMT, according to Thomson Reuters data.
The z-spread expresses relative value by calculating the number of basis points that needs to be added to a zero-coupon yield curve to make the bond's discounted cash flows equal its present value.
Ooredoo also completed a $1 billion four-year revolving credit facility at the beginning of April, funded by 14 banks, to be used for general business purposes and to help refinance an existing $1.25 billion facility. - Reuters