Hong Kong: Banks are discussing a $7 billion, five-year, offshore loan to back Bharti Airtel’s $9 billion offer to buy Zain’s African cellular assets, sources told Reuters Basis Point.
Sources informed that the remaining $2 billion equivalent will come from the rupee market, adding that the currency mix was yet to be finalised.
Separately, State Bank of India (SBI) chairman O.P. Bhatt in Mumbai said that Bharti had shown interest in obtaining funding from the bank for the Zain assets deal and was in talks with them.
“Bharti is interested,” he said without elaborating.
“During its tie-up talks last year with South Africa’s MTN that were aborted, Bharti had approached State Bank of India for dollar and rupee loans totalling about $2 billion,” a government minister had said last August.
Shares in Bharti fell 1.4% on Wednesday in a slightly weak Mumbai market, taking losses to more than 12% since the company confirmed its talks with Zain, triggering concerns the deal may put pressure on earnings in the near term.
Bharti’s market value has lost $3 billion to $22.6 billion.
The firms are in exclusive talks until 25 March for the proposed deal, which would give Bharti access in 15 African countries with about 42 million subscribers.
Loan pricing talks
People familiar with the deal said that Bharti may finalise by Friday its financing details in what could be the largest acquisition loan for an Indian borrower.
The Basis Point report also said pricing talks had emerged for the offshore loan with some bankers saying Bharti can achieve an all-in of below 300 basis points, lower than 315 basis points it was supposed to pay for $3-4 billion loan lined up last year for the thwarted MTN deal.
Some bankers, however, think because of the mammoth size of the present Zain financing, pricing will have to be more than 315 basis points.
Standard Chartered and Barclays are advising Bharti in the deal.