Etisalat-Zain deal faces fresh hurdles
Zain Group shareholders take legal action to block the company's sale to Etisalat - report
Etisalat's plan to acquire Zain Group is facing further hurdles, with a large shareholder of Zain having filed lawsuits to block due diligence for the deal, according to a report from the Financial Times.
The Kharafi family, which owns 20-25% of Zain and engineered the plan to sell the group to Etisalat, said it had received support from other shareholders for the sale, but other significant shareholders are now voicing their disapproval.
Fawares Holding, which owns about 4.5% of Zain, has filed a lawsuit in Kuwait to block the company from opening up its books to its UAE rival.
Meanwhile, Sheikh Khalifa Ali al-Khalifa al-Sabah, who represents Fawares on Zain's board and is believed to indirectly control up to 15% of Zain Group, has filed a lawsuit attempting to stop the sale of Zain's Saudi Arabian subsidiary, according to the FT report. The sale of Zain Saudi Arabia is a necessary condition of Etisalat's acquisition of Zain Group.
The report added that Ali Mousa, chairman of Securities Group, which represents Zain shareholders including Sheikh Khalifa Ali al-Khalifa al-Sabah, said that major shareholder represented by his company would not sell their shares to Etisalat and were opposed to the sale of Zain Saudi Arabia.
Meanwhile, Etisalat is continuing to secure financing for the deal, and plans to raise $12 billion in loans to fund it, according to a report from Bloomberg.
Etisalat is seeking a $6 billion one-year loan that can be extended by six months, according to the report, which cited people close to deal. Etisalat plans to refinance the debt with bond sales, the report added.