Zain Saudi telco nears $2.5bn loan agreement
Al-Rajhi Bank and Banque Saudi Fransi confirmed leading refinancing facility.
Zain Saudi Arabia, the newest of three mobile phone operators in the kingdom, is close to sealing an agreement for a $2.5 billion Islamic loan, a spokesman for its parent company Zain said on Monday.
"This is a two-year murabaha (Islamic financing)," the spokesman said.
Al-Rajhi Bank and Banque Saudi Fransi, the Saudi affiliate of France's Calyon, are leading the refinancing facility, Zain said.
The facility, in both Saudi riyals and dollars, was oversubscribed after its launch in April and priced at 425 basis points over LIBOR, Zain said.
It will have a six-month extension option at the behest of the borrower and will be used to fund the expansion of Zain Saudi Arabia's network.
The murabaha will replace a previous one worth 9.4 billion riyals ($2.51 billion) which is to mature on Aug. 12, the spokesman said.
In a statement posted on the Saudi bourse website, Zain Saudi Arabia said it has agreed with banks to postpone from July 27 to Aug. 12 the maturity of the previous murabaha.
Zain Saudi Arabia, which is 25-percent owned by Kuwait's Zain, last year became the third mobile phone operator to be licensed in the kingdom after paying a $6.1 billion entry ticket.
The company saw losses swelling by 291 percent in the second quarter bringing to 3.9 billion riyals its accumulated losses since it started business last August.
Under a murabaha deal, an Islamic bank buys an asset from a third party and sells it to its customer at cost plus profit. This allows the bank to extend financing without charging interest, which is forbidden by Islamic law. (Reuters)