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‘Bharti eyes debt financing for Zain Africa buy’

‘Bharti eyes debt financing for Zain Africa buy’
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First Published: Tue, Feb 16 2010. 04 29 PM IST
Updated: Tue, Feb 16 2010. 04 29 PM IST
New Delhi / Mumbai: Bharti Airtel, which has offered $10.7 billion for Kuwaiti telecom Zain’s African assets, is likely to finance the majority of the deal’s purchase price with foreign currency loans, three people familiar with the matter said.
Zain, which is selling its telecom operations in 15 African countries to Bharti, said on Tuesday the deal included $10 billion to be paid at completion and the remaining $700 million by the end of the year.
Separately, the NDTV Profit television channel in India said Bharti was considering a rights issue to help fund the deal. However, at the time of its ultimately thwarted merger talks with South Africa’s MTN Group last year, Bharti had said there was no plan for any rights issue.
A Bharti Airtel spokesman declined to comment on Tuesday on how the firm would fund the deal.
Standard Chartered and Barclays are advising India’s largest telecom firm on the merger and its funding, one of the sources told Reuters.
One source said StanChart was looking to lead roughly $5 billion of borrowing for Bharti, and added funding could include bridge loans and other debt issuances.
Borrowing conditions have improved since Bharti secured loan commitments of $5 billion for its failed deal with MTN. Standard Chartered and Barclays had led that planned loan, with Standard Chartered underwriting a part of it.
Separately, television channel ET Now said Bharti has also sounded out the country’s top lender, State Bank of India, and foreign banks Goldman Sachs and Nomura, in addition to StanChart and Barclays, on funding the Zain deal.
State Bank of India had agreed to provide $2 billion in loans to Bharti during its tie-up talks with MTN.
Bharti has a low debt-equity ratio, but concerns that a huge debt burden for the Zain deal could stretch its balance sheet has weighed on its shares.
Bharti stock fell 4.5% on Tuesday, after dropping 9.2% in the previous session. It was the second-worst performing stock among the benchmark index components last year.
BNP Paribas Securities on Tuesday cut its rating on Bharti shares to “hold” from “buy”.
“We believe deal will be dilutive and significant execution risks persist,” analysts Sameer Naringrekar and Kunal Vora said in a note.
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First Published: Tue, Feb 16 2010. 04 29 PM IST
More Topics: Bharti Airtel | Zain | Telecom | Debt | Barclays |