DUBAI Feb 16 UAE telecom firm du has
agreed terms on a $720 million loan which will be used to
replace two existing debt facilities and lower the company's
funding costs, two banking sources said on Sunday.
The five-year loan will be provided by Abu Dhabi Commercial
Bank, National Bank of Abu Dhabi and Saudi
Arabia's Samba Financial Group, the sources who both
have knowledge of the matter said. They spoke on condition of
anonymity as the information is not public.
Du declined to comment when contacted by Reuters.
The interest rate which du will pay for the new loan will be
140 basis points over the London interbank offered rate (Libor),
the sources said.
Bankers not involved in the deal remarked that the pricing
which du ultimately got from the three lenders was extremely
cheap, especially as it had managed to negotiate a loan with a
"There have been talks for maybe 3-4 months between the
company and banks but while they wanted five years, the most
that banks were prepared to offer was three years - especially
at the pricing levels they wanted," said one of the bankers not
involved in the transaction.
By comparison, Commercial Bank of Qatar, the Gulf
Arab state's second-largest lender by assets, is currently
marketing a $600 million loan, split between a two- and
three-year portion, which pays 120 and 140 bps respectively when
the margin is combined with the fees a bank will earn.
Du's new loan will replace two existing debt facilities.
The first is a $220 million three-year loan which expires in
June. That transaction paid a margin of 145 bps over Libor and
was provided by Dubai lenders Emirates NBD and Mashreq
as well as NBAD and Samba, according to Thomson
It will also replace a $500 million facility raised in
late-2012, which is due to run until 2017 and pays a margin of
175 bps over Libor. The banks who funded that deal were ADCB,
Mashreq, NBAD and Samba.
Du joins other companies which are currently raising cash to
refinance existing debt, even if those facilities still have a
substantial amount of time to run.
Emirates Steel is seeking $1.3 billion from banks to replace
debt and fund the purchase of assets from its parent firm, even
though the original deal has more than three years to run.
(Additional reporting by Matt Smith; Editing by Anthony Barker)