Bharti Airtel exploring options to finance Zain deal: report
20 Feb 2010
Bharti Airtel is reportedly in the process of exploring options to finance its $10.7 billion bid for Kuwaiti telecom major Zain's African assets, according to ET NOW. The channel cited two people with direct knowledge of the development as saying that the foremost amongst the options being considered is a preferential allotment of shares to its largest shareholder, SingTel.
The report citing a banker directly involved with the Bharti bid, says the Indian telco was considering the preferential allotment route as a rights issue would be difficult with the company's stock having been sold by investors following its announced deal with Zain.
The telco's scrip closed at Rs281.90 on Thursday, on marginal gains following the 14 per cent battering its stock received in trade on Tuesday and Wednesday, the report said.
According to the banker, the preferential allotment would also be an expression of solidarity by SingTel and would be aimed at boosting investor confidence in the company after several brokerages and analysts expressed concerns that the company had agreed to pay far too much for the assets of Zain, the report says.
The channel cited a company spokesperson as stating in an emailed reply that Bharti Airtel had nothing to add to the media comment it made on Tuesday. In response to an email query, a spokesperson for SingTel said, "It is premature to talk about funding as the transaction is subject to ongoing discussions, due diligence, and customary regulatory approvals. As disclosed in Bharti's press statement, there is an exclusivity period for parties' discussions till 25 March. SingTel has always stated that we are a long-term strategic investor in our associates. As a strategic investor, we have significant governance and shareholder rights and we are actively involved in key decisions including major investments. We always seek to add value to our associates through both organic and inorganic means."
The report, citing the banker quoted earlier, says the Bharti management would be meeting various banks next week to convey the quantum of funds to be raised through debt. It goes on to say that it is learnt that Bharti could take a bridge loan for a period of two years that will later be sold down and converted into long-term debt.
