MTN raises more than $1.3bn for bond sale

AFRICA’S largest cellular operator by sales, MTN, yesterday said it had entered into three loan agreements, raising more than $1.3billion (R19bn) as the company marketed a potential bond sale.

The company, which is on a roadshow in the US and the UK to gauge investor appetite for a bond sale, said it was being provided with R4.8bn from local and international banks and financial institutions.

“These financing arrangements are in line with the 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.

“MTN’s funding strategy further aims to maintain a balance of operating currency and dollar-denominated debt.”

Half-year loss

MTN’s move to attract funding comes after the company reported its first half-year loss in August, partly caused by an agreement to settle a record 330 billion naira (R15bn) fine in Nigeria. MTN and its subsidiaries have $3.2bn of debt and interest payments due by the end of July next year, according to Bloomberg data.

That includes a $2.75bn bridge-term loan, a R2bn senior unsecured loan and R1.25bn of bonds, the data show.

Two loan deals were signed last month.

A facility for $250 million matures in 2019 and a $750m agreement closes in 2021, the data show. Its subscriber base of 233 million did not grow during the six months to June and MTN is struggling to repatriate R15.4bn tied up in the company’s Iran unit.

“The process of repatriating money out of Iran has been more complex than we initially thought, with Iran not having ties with international banks,” MTN’s outgoing chief financial officer Brett Goschen said at the company’s first-half results presentation on August 5.

“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 hopes to start moving the funds out of Iran during the first half of next year, according to Goschen.

He will leave at the end of the month and a successor has yet to be appointed.

“MTN remains confident of its ability to remit monies in the short to medium term, and is currently on a process of putting in place the appropriate governance structures to facilitate the repatriation of funds,” MTN said yesterday.

MTN shares rose 2.89 percent to close at R119 yesterday.