MTN raising $4.5 billion loan for merger with Bharti: report

South African telecom group MTN is close to finalising a $4.5 billion loan syndication deal with banks to finance its merger with Bharti Airtel, reports quoting banking sources said today.

The international facility will consist of a term loan and a revolving credit and a bridge loan in part that will be refinanced by a bond issue, the report said.

Around $1 billion of the total loan will be used to refinance existing debt, the report said, adding, the loan will have a margin over 300 basis points over LIBOR.

The report comes after the two announced an extension of the deadline to complete their $23 billion cash-and-share swap until 30 September.

Earlier reports said Bharti was unlikely to sweeten its offer after the value of the premium on offer to MTN came down to around 8 per cent from 15 per cent earlier.

Stock research and investing information firm India Infoline Ltd (IIFL) estimates Bharti to have offered a 15.1 per cent premium to MTN shareholders at 24 May prices, but subsequent movement of stock prices and exchange rates has seen this fall to 8.2 per cent.

A merger would create the third largest mobile phone operator in the world. The two would also gain from each other's strengths. Bharti may add value in exporting the low-cost high volume model while MTN could extract some managed services gains on the transaction, according to the IIFL research report.

Standard Chartered Bank is advising Bharti on the planned acquisition. Bank of America Merrill Lynch and Deutsche Bank are advising MTN.