24 January 2011
Telecoms group Telkom has secured a US$127-million syndicated loan from several international banks, backed by the China Export and Credit Insurance Corporation (Sinosure), in order to finance capital expenditure on its mobile division, 8ta.
The loan, which has a tenor of up to seven years, is the first under an Export Credit Agency (ECA) umbrella facility that will cover Telkom’s ECA financing requirements over a five-year period, during which the telecoms giant plans to expand its mobile operations.
“We are pleased to deliver to Telkom a long-term, competitive Sinosure facility,” Gabriel Buck, head of ECA financing at Barclays Capital, the advisors to the deal, said in a statement this week.
“This represents the first financing for Telkom under their ECA umbrella framework, and will provide a benchmark for any future Sinosure financings.”
The syndicated loan, which will be used to buy equipment from Chinese telecoms equipment manufacturer Huawei, was heavily over-subscribed, and benefits from 95% cover for both political and commercial risks by Sinosure.
The banks involved in the deal included Barclays Capital, Absa Capital, China Development Bank, Bank of China, China Construction Bank, Citibank, HSBC and the Sumitomo Mitsui Banking Corporation.
According to Barclays Capital, the solution allowed Telkom to secure funds at a cheaper rate than was otherwise available in either the international bank or bond markets.
“Given the existing liquidity constraints within the bank and bond markets, this facility provides Telkom with an attractive and flexible source of additional cost-effective liquidity,” said Anthony Wilter, co-head of Absa Capital’s investment banking division.
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