Business Day

MTN rises for sec­ond day af­ter $1.3bn loan boost

- LONI PRINSLOO and RE­NEE BONORCHIS Jo­han­nes­burg Business · Finance · Investing · Banking · United States of America · United Kingdom · Nigeria · Bank of America · Merrill Lynch · Merrill · Lynch · Barclays · Mizuho Financial · Societe Generale Group · State Bank of India Group · India · Tokyo · Mitsubishi Group · JPMorgan Chase · Standard Chartered Group · Iran · MTN Group · Citigroup · Absa Group Limited · Bank of India · Bank of Tokyo-Mitsubishi · The Bank of Tokyo-Mitsubishi UFJ Limited · Sumitomo Mitsui Financial

MTN Group climbed for a sec­ond day af­ter rais­ing more than $1.3bn in loans be­fore the po­ten­tial sale of bonds.

The shares jumped 2.2% to R121.49 in Jo­han­nes­burg on Wed­nes­day for the big­gest two­day ad­vance since June 29 to value the com­pany at R225bn. MTN is be­ing pro­vided with $1bn and R4.8bn from lo­cal and in­ter­na­tional banks and fi­nan­cial in­sti­tu­tions, it said in an e-mailed re­sponse to ques­tions.

The com­pany is on a road show in the US and UK this week to gauge in­vestor ap­petite for debt se­cu­ri­ties.

“The fact that MTN man­aged to se­cure the loans and at­tract funds from in­sti­tu­tional in­vestors bodes well,” said Sasha Naryshkine, a di­rec­tor at Ves­tact in Jo­han­nes­burg, which holds MTN stock.

“This might also help MTN to get a good out­come in terms of sell­ing bonds. In­vestors will look for yields with­out too much risk, and things are look­ing much bet­ter for MTN. The tim­ing is good for an MTN bond sale.”

MTN’s move to at­tract fund­ing comes af­ter the com­pany this year posted its first half-year loss, partly caused by an agree­ment to set­tle a 330-bil­lion naira (R14.67bn) fine in Nige­ria.

The stock has de­clined 29% over the past 12 months amid con­cern over the penalty and a sub­scriber base of 233-mil­lion that didn’t grow in the six months through June. The op­er­a­tor is also strug­gling to repa­tri­ate R15.4bn tied up in its Ira­nian unit.

MTN and its sub­sidiaries have $3.2bn of debt and in­ter­est pay­ments due by the end of July next year, ac­cord­ing to data com­piled by Bloomberg. That in­cludes a $2.75bn bridge-term loan, a R2bn se­nior un­se­cured loan and R1.25bn of bonds, the data show.

“These fi­nanc­ing ar­range­ments are in line with MTN’s fund­ing strat­egy, which aims to im­prove its debt ma­tu­rity struc­ture on an on­go­ing ba­sis and main­tain ad­e­quate bank fa­cil­ity head­room to sup­port its credit rat­ing,” the com­pany said.

Two loan deals were signed on Au­gust 25, ac­cord­ing to data com­piled by Bloomberg. A fa­cil­ity for $250m ma­tures in 2019 and a $750m agree­ment closes in 2021, the data show.

The agent for the fa­cil­i­ties was Cit­i­group’s global mar­kets unit, which was also a joint book run­ner along with Bank of Amer­ica Mer­rill Lynch. The lead ar­rangers for the credit in­cluded units of Bar­clays Africa Group, Mizuho Bank, So­ci­ete Gen­erale SA and State Bank of In­dia.

There were 10 lenders in to­tal, ac­cord­ing to the data. They in­cluded Bank of Tokyo-Mit­subishi, JPMor­gan Chase, Stan­dard Char­tered and Su­mit­omo Mit­sui Bank­ing.

MTN re­mained con­fi­dent it would be able to move money out of Iran “in the short to medium term”, the com­pany said. It was in the process of putting in place “the ap­pro­pri­ate gov­er­nance struc­tures to fa­cil­i­tate the repa­tri­a­tion of funds”.

The process had been more com­plex than ini­tially thought be­cause Iran did not have ties with in­ter­na­tional banks, MTN chief fi­nan­cial of­fi­cer Brett Goschen said at the first-half re­sults pre­sen­ta­tion in Au­gust.

“Every week we are get­ting a lit­tle bit closer, but it will take us at least five to six months to get the money out once we start the first tranche.”

MTN ex­pects to start mov­ing funds out dur­ing the first half of 2017.

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