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Thu 14 Oct 2010 01:34 AM

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Etisalat said to seek over $9 billion loan for Zain

Acquisition loan to be the largest by a company in the Middle East and Africa since at least 1999

Etisalat said to seek over $9 billion loan for Zain
LARGEST LOAN: Etisalats loan to acquire a stake in Zain would be the largest acquisition loan by a Middle Eastern company since at least 1999. (Getty Images)

Emirates Telecommunications Corp, the UAE’s largest phone company, plans to borrow more than $9 billion to buy shares in Mobile Telecommunications Co, three bankers familiar with the deal said.

The financing to acquire a stake in Zain, as the Kuwaiti phone company is known, would be the largest acquisition loan by a company in the Middle East and Africa since at least 1999, according to data compiled by Bloomberg. It may take the form of a short term bridge loan that will be replaced with longer term financing, said the bankers, who declined to be identified as the discussions are private.

Emirates Telecom, known as Etisalat, started talks with banks to finance the deal, Al Bayan reported today citing chief financial officer Salem Al Sharhan. Jamal Al Jarwan, chief executive officer of Etisalat’s international investments department, couldn’t be reached for comment.

The Abu Dhabi based company will take out loans, sell international bonds or a combination, according to the report in Al Bayan which didn’t identify lenders. Etisalat won’t need financing from the government, according to the newspaper.

Etisalat last month offered to buy 46 percent of Zain in a deal valuing the company at about $11 billion. National Bank of Kuwait, an adviser to Etisalat on the acquisition, is also arranging loans to finance it, Kuwait news agency KUNA reported, citing National Bank’s chief executive officer Ibrahim Dabdoub.

The deal would give Etisalat majority control of Zain and extend its reach in the Middle East, where Zain operates in countries from Kuwait and Iraq to Bahrain.

Etisalat offers telecommunications services in 18 countries in the Middle East, Africa and Asia, counting more than 100 million customers, according to its website. The seven emirates of the UAE make up about 86 percent of Etisalat’s sales.

Etisalat had $3.08 billion of cash at the end of last year, earnings statements show.

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