Home BusinessBharti said to offer 320 bps more than Libor for MTN loans
Bharti Airtel may pay lenders as much as 3.2 percentage points more than the London interbank offered rate (Libor) as it seeks to borrow $5 billion to buy a stake in MTN Group, three people familiar with the matter said.
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India’s biggest mobile-phone company is in talks with eight banks, including Barclays and Citigroup Inc for between $3 billion and $4 billion of five-year dollar loans priced over the London benchmark, said the people, who asked not to be named because they aren’t authorised to discuss terms.
Bharti and MTN have reached a $24-billion preliminary agreement to buy each other’s shares, people familiar with the matter said yesterday.
Bharti also plans to borrow between Rs 5,000 crore and Rs 7,500 crore ($1 billion and $1.5 billion) from State Bank of India and Kotak Mahindra Bank, the three people said.
“I don’t think Bharti should have any problem at all getting the funding it requires,” Chirag Shah, an analyst at
IDFC-SSKI Securities, said in a phone interview from Mumbai.
“They currently have very low gearing and the cashflows are very strong and predictable.”
The loans would help Bharti fund the world’s biggest cross-border deal as it seeks to join MTN to create a phone company with annual sales of $20 billion and 200 million wireless subscribers from Mumbai to Johannesburg.
Together, the two companies would challenge Vodafone Group’s push into India and Africa.
Bharti added a record 8.44 million users last quarter, 60 per cent of them in rural and semi-urban areas, Chief Executive Officer Manoj Kohli had said on July 23.
The additions boosted the operator’s total wireless subscribers to 102.4 million, more than the combined populations of Spain and the UK.
“We have had several cross-country deals of late, including Tata Steel and Corus, and international banks as well as local banks have been happy to loan money to finance these transactions,” said IDFC-SSKI’s Shah.
Mumbai-based Tata Steel paid interest of 2.75 percentage points over the London interbank offered rate on £500 million ($826 million) of seven-year loans as part of its $12-billion acquisition of UK steelmaker Corus Group in 2007, according to data compiled by Bloomberg.
The company also agreed to £500 million of six-year loans paying 2.375 percentage points over Libor and £500 million pounds of five-year debt paying 2 percentage points more than the benchmark, the data show.