Etisalat Draws Strong Bank Demand For $8bn Maroc Tel Bid Loan - Gulf Business
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Etisalat Draws Strong Bank Demand For $8bn Maroc Tel Bid Loan

Etisalat Draws Strong Bank Demand For $8bn Maroc Tel Bid Loan

The UAE telecoms operator has already secured the backing of 12 banks and up to four more could join.

Abu Dhabi telecom group Etisalat is set to sign an $8 billion loan facility next week with as many as 16 banks to help fund its Maroc Telecom stake bid, bankers said.

The availability of credit highlights demand for high-quality Gulf names in the loan market, bankers said, while also advancing Etisalat’s attempts to secure an asset whose sale is seen as a vital part of a restructuring at French group Vivendi, owner of the Maroc Telecom stake.

Vivendi is looking to offload its 53 per cent stake in the Moroccan company to help reduce its debts, with potential bidders requiring more cash than the stake’s $6 billion market value as minority shareholders need to be offered the option of being bought out as well.

Binding bids for the stake are due on April 22, with proof of being able to fund a buy a key part. The Etisalat facility is earmarked for signing by April 25, a Gulf-based banker said.

A deal is crucial for Vivendi, whose management is due to face shareholders at an April 30 meeting with little to show so far for a year of efforts to reduce exposure to telecoms, focus more on media and cut debt.

The French group failed in attempts to sell video game unit Activision Blizzard and Brazil telecom unit GVT. Pulling off a Maroc Telecom sale will decide the next move in its strategic overhaul.

Etisalat is in a straight fight with Qatar’s Ooredoo, formerly Qatar Telecom, for the stake, after South Korea’s KT Corp dropped out of the running, sources told Reuters on Monday.

Etisalat declined to comment when contacted by Reuters.


For its financing, Etisalat has already secured the backing of 12 banks and up to four more could join before the three-part $8 billion loan signs next week, banking sources said, speaking on condition of anonymity as the information is private.

“There is plenty of desire to lend to top-tier credits and the liquidity is out there, so if you have a decent name and can promise auxiliary fee-generating business then there will be good demand from banks,” said one London-based banker.

Half of Etisalat’s fundraising will come in the form of a six-month bridge loan, which will be refinanced later by a bond issue, two separate banking sources said.

The bridge loan – which can be extended by a further six months to allow more time for the bond issue to take place – will pay 45 basis points over the relevant benchmark rate for the first six months, stepping up to 75 bps if the extension is activated.

The remaining $4 billion is split equally between a three-year “bullet” loan, meaning it will be repaid at the end of the loan’s life, and a five-year amortising facility, with repayments of the loan and its interest paid at scheduled times during the deal’s duration, the two sources said.

Including both the interest rate and fees, the three-year part pays just below 100 bps, with the five-year tranche paying in the low 100s.

Banks can commit to the transaction in either dollars or euros, with the $8 billion total amount to be split equally between the lenders who sign up to the deal.

The Maroc Telecom bid is Etisalat’s first public approach to a foreign company since a $12 billion bid for a controlling stake in Kuwait’s Zain failed two years ago.

Ooredoo is also speaking to banks about securing loan financing for its bid and some of the lenders who are backing Etisalat’s loan are also present on the Qatari firm’s fundraising, the banking sources said.


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