Kuwait’s Zain Seeks New Loan As $867m Facility Nears Maturity

Kuwait’s Zain has sought proposals from banks for a loan worth hundreds of millions of dollars, two banking sources said on Tuesday, as the telecom company raises cash before an existing $867 million debt facility matures.

The No. 5 telecom operator in the Gulf Arab region by market value has invited lenders to participate in the deal and for their views on what likely interest rate it would pay for securing the loan, the bankers said, speaking on condition of anonymity as the information is not public.

“Zain is often discussing potential new loans to finance possible expansion opportunity purposes and general corporate needs, as well as trying to refinance existing loans at better rates and conditions for the group and its operations,” a Zain spokesman said in an emailed response.

“Our debt to earnings before interest, taxes, depreciation and amortisation (EBITDA) ratio of well below 1x is low in comparison to industry standards and thus Zain is always active in seeking and considering new financing opportunities.”

The new loan will be a revolving credit facility, the sources said, with a five-year lifespan and an amortising structure, one of the sources said.

Under an amortising structure, the borrower pays back both interest and principal during the lifetime of the loan, as opposed to a bullet facility where only interest is serviced during the tenure.

The sources did not give a precise figure which Zain is looking to raise from the loan.

While the invitation describes the use of funds as for general business purposes, it is likely that the financing will replace an existing $867 million revolving facility which is due to mature in March, one of the sources said.

That loan paid 160 basis points over the London interbank offered rate (Libor) and was the larger portion of a $1.3 billion two-part facility which Zain borrowed in 2011.

It was arranged by BNP Paribas, Citigroup, Credit Agricole, National Bank of Kuwait and Standard Chartered, with 15 banks in total providing funds.

The new loan will be self-arranged by Zain and is expected to complete before the end of the first quarter, the sources said.