Telecoms operator says to reach new agreement with lenders for some outstanding loans
Saudi Arabia's Etihad Etisalat (Mobily) will reach agreement with lenders to set new covenants for some outstanding loans by the end of 2015, its chief executive said in a television interview on Thursday.
The telecoms company, part-owned by Abu Dhabi-listed Etisalat, revealed in February that it was in breach of the terms of loans from various lenders after issuing a drastically reduced restatement of previously announced profit.
This was because long-term financing facilities with various lenders required it to achieve a minimum earnings before interest, tax, depreciation and amortisation (EBITDA) and its reduced earnings brought EBITDA below the agreed level.
Mobily, Saudi's No.2 operator, predicted in February that it would reach a deal with lenders by the end of June, but an agreement has proved elusive.
"I think the subject will be completed at the end of the year," Mobily CEO Ahmad Farroukh told Al Arabiya, adding that Ramadan and the month of holidays in August had contributed to delays.
A total of 2.4 billion riyals ($639.98 million) of financing facilities will fall due in 2015 and 2.1 billion riyals in 2016, with the rest of the company's debt spread across the period until 2024, Mobily said in March.
The failure to agree new loan covenants has led some of its borrowings to classified as current liabilities.
These totalled 17.5 billion riyals at Sept. 30, according to a Mobily earnings statement on Wednesday, which showed that the company had swung to a third-quarter loss of 158 million riyals.
In late July Mobily restated its results for the 27 months to March 31, cutting total profit over the period by about 1.76 billion riyals in its latest attempt to resolve an accounting scandal. It then reported a second-quarter loss of 900.9 million riyals.
The company had attributed its woes to the premature booking of revenue from wholesale broadband leases and mobile promotional campaigns and has also made further changes to the way it accounts for some contracts and the depreciation of property and equipment.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.