* AD govt fund financing 25 pct of Etisalat's Maroc Tel buy
* Mubadala seen most likely; lending banks in dark
* Acquisition should close this week
* Etisalat raising 3.2 bln euros loan from banks
(Adds detail, context)
By David French
DUBAI, April 27 An Abu Dhabi state-owned fund is
financing a quarter of Etisalat's 4.2 billion euro
purchase of Vivendi's stake in Maroc Telecom,
said three bank sources with knowledge of the deal, adding it
should close this week.
The identity of the fund is a closely-guarded secret. The
banks that will provide the remaining 3.15 billion euros of loan
finance have not been told which of the emirate's state-owned
entities is supplying the cash.
The fund is most likely to be Mubadala, two of
the banking sources and one industry source said, given that it
already has telecommunications assets and an existing
partnership with Etisalat in Africa.
Etisalat, Vivendi and Mubadala all declined to comment.
Etisalat agreed last November to buy Vivendi's 53 percent
holding for 3.9 billion euros, plus a further 300 million euros
in 2012 dividends from the Moroccan firm.
The deal is a key part of Vivendi's strategy to cut its
debts and focus on areas like music and pay-TV, which it thinks
have greater growth potential. Etisalat meanwhile will get new
revenue streams outside of the domestic market which still
dominates its earnings despite previous expansion drives.
Serkan Okandan, Etisalat's chief financial officer, said
last month the deal should complete by end-May, but the three
bank sources said they expected it to be done by the end of
April, given that Etisalat had requested no further extensions
on the committed financing.
Under the terms of an acquisition loan, lenders allocate the
funds but the cash isn't taken by the borrower until the buy is
completed. Banks have pledged to fund Etisalat's purchase since
April last year and have extended their commitments on a number
of occasions since then; the latest expires on April 30.
Etisalat earmarked around $8 billion of loan financing from
around 16 banks to back its bid. The final facility is much
smaller as that sum was to buy 100 percent of Maroc Telecom.
Etisalat will hold the Maroc Tel stake as a separate legal
entity, in which the Abu Dhabi fund has bought a 25 percent
stake, the sources said.
The rest of the 3.15 billion euro bank funding will be split
between a short-term bridge loan and a three-year portion, said
two of the original sources, and one other financial source.
Roughly the same number of banks will fund the deal, the two
original sources added.
Much of this funding, including the full bridge loan, is
expected to be refinanced through future bond or sukuk issues.
With Etisalat planning to use dividend payments from Maroc
Tel to repay the acquisition debt, bonds will provide
longer-term funding to match the timeframe needed to receive
enough dividends - one banker estimated it would take between 7
and 8 years of payments to clear the debt.
Etisalat, currently in 15 countries across the Middle East,
Africa and Asia, said Sunday its first-quarter net profit rose
11 percent on higher revenue and subscribers.
(Additional Reporting by Mirna Sleiman and Matt Smith; Editing
by Sophie Walker)