New Delhi: Bharti Airtel’s board is meeting on Saturday to discuss the progress of talks to buy Kuwaiti telecom Zain’s African assets in a deal worth $9 billion, a source with direct knowledge of the development said.
The source also said Bharti might put part of the purchase price in an escrow account to protect it from potential problems, including an ownership dispute in Zain’s Nigeria operations.
The companies are in exclusive talks until 25 March and Bharti is conducting a due diligence assessment of the Zain assets.
“Currently Bharti is aiming to meet the 25 March deadline, but there could be a slippage of a day or two. Tomorrow’s board meet is crucial,” the source said.
The source said financing details were likely to be finalized in the next two days.
A Bharti spokesman declined to comment on the board meeting and the possible setting up of an escrow account.
Both Bharti and Zain have said $700 million of the purchase price would be paid a year after the completion of the deal, and the source said part of it would be put in the escrow account.
“The due diligence has been conducted quite speedily. So if something works out negatively, the money can be adjusted against that,” the source said, referring to the money likely to be put in the escrow account.
“No major issues have emerged in the due diligence apart from Nigeria,” he said.
A dispute between Zain Nigeria and South Africa-based minority shareholder Econet Wireless Holdings could cause problems for Bharti’s third effort to get its hands on a sizeable business in Africa.
But sources have said a team of bankers from UBS, which is advising Zain, visited Nigeria with Bharti Chairman Sunil Mittal last week, indicating the parties had worked around the problem.
Banking sources have told Reuters Basis Point that Bharti is aiming to raise up to $8.5 billion in offshore loans to fund the deal and had issued a term sheet to banks.