Profit Margin reduced by 18%
Zain KSA has announced its successful agreement signing to extend the maturity of its Murabaha Facility for 5 years till 31 July, 2018. This agreement was signed with a consortium of the following banks: Al Rajhi Bank ("ARB"), Arab National Bank ("ANB"), Banque Saudi Fransi ("BSF"), Boubyan Bank, Credit Agricole CIB ("CACIB"), Gulf Bank, National Bank of Kuwait ("NBK") and Saudi British Bank.
The company has partially repaid the facility, utilizing a portion of its internal cash resources and the current principal outstanding stands at USD 2.3 billion (SAR 8.63 billion). The new facility arrangement will carry a decreased profit margin by around 18% (equivalent to 75 Basis Points) compared to the previous agreement.
Mr. Fraser Curley, Zain KSA CEO, stated that the facility has been restructured as an amortizing facility, 25% of which will be due during years 4 and 5 of the life of the facility, with 75% due at maturity, indicatingthat partially repaying the facility and decreasing the profit margin, will have a positive impact in reducing the company's losses
Mr. Curley, also confirmed that the new long-term financing agreement reflects the company’s successful efforts in supporting its financial results on both the short and long terms, praising the commitment of the investors towards finalizing all arrangements needed to sign the agreement.
Mr. Fahd bin Al-Deghaither, Chairman of the Board of Directors of Zain KSA,said the result ofthorough discussions with the Investorsand followed the signing of the company's agreement to postpone the payment of government fees due in the next seven years. This willhelpstrengthen the financial position of Zain KSA.
Al-Deghaither added that the facility extension represents the final stage of reorganizingthe company’s balance sheet, following the USD 325 million Export Credit Agency Facility in June 2012, the Capital Restructuring and Rights issue in July 2012 and the USD 600 million Junior Debt Facility in June 2013. He stressed that this reorganization leaves the company extremely well positioned, with solid liquidity and a long-term debt maturity profile, to take full advantage of the tremendous growth opportunities available in the fast growing Saudi telecoms market.