MTN rises for second day after $1.3bn loan boost
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.