Zain extends the repayment of USD2.4bn loan until 31 July

27 Jun 2013

Cash strapped cellco Zain Saudi Arabia, an affiliate of Kuwait’s Zain Group, has extended the repayment period of a SAR9 billion (USD2.4 billion) facility until 31 July 2013, the Saudi Stock Exchange (Tadawul) reported. The Sharia-compliant cost-plus-profit (Murabaha) loan was originally due to be squared in 2011, but has been reimbursed numerous times since then. According to the press announcement, the latest extension is to allow the company to finalise a new long-term replacement agreement with creditors.

According to TeleGeography’s CommsUpdate, Zain Saudi Arabia had liabilities of SAR19.5 billion at the end of 2012, and has struggled to compete against rivals Saudi Telecom Company and Mobily, a subsidiary of the UAE’s Etisalat, ever since it paid USD6.1 billion for the third mobile licence in the country in August 2008. The company, however, managed to secure a SAR2.25 billion (USD600 million) three-year borrowing facility earlier this month, guaranteed by Zain Group. The loan was provided by four banks, including Arab National Bank, Banque Saudi Fransi, Gulf International Bank BSC and Samba Financial Group, and was used to help refinance its SAR9 billion Islamic loan. At the same time, Zain Saudi also reached an agreement with the Saudi Ministry of Finance to defer the payment of licence-related levies, estimated at SAR56 billion (USD1.49 billion) over a seven-year period. The arrangement was signed by Minister of Finance Ibrahim bin Abdulaziz Al-Assaf and Zain Saudi’s recently appointed Chairman of the Board of Directors Fahd Bin Ibrahim al-Dughaither, and will be treated as a commercial loan, with the first instalment due on 1 June 2021.