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"Zain KSA": the new Junior Debt facility improves the Working Capital

Wednesday 24 June 2015

"Zain KSA": the new Junior Debt facility improves the Working Capital

Mobile Telecommunications Company Saudi Arabia "Zain KSA" announced it has completed a new SAR 2.25 billion long-term borrowing facility with three years maturity after obtaining consent from the syndicate of lenders which includes Arab National Bank, Banque Saudi Fransi, Gulf International Bank B.S.C. and Samba Financial Group.
Mr. Fraser Curley, Chief Executive Officer of "Zain KSA" indicated that the facility is subordinated to the main Murabaha Facility amounting to SAR 9 billion, and will benefit from an unconditional and irrevocable guarantee by Mobile Telecommunications Company K.S.C (Zain Group), adding that the proceeds of this new facility will be utilized to repay the previous one, and that the principle amount will be repaid in one bullet payment at the maturity date.
He pointed out that as a result of this agreement, the company will benefit from the cash liquidity from its operations over the next three years to continue the expansion and development of its network, in addition to improving the liquidity ratio by changing the classification of the loan from current liabilities to non-current liabilities.
Mr. Curley added that the company is experiencing significant improvements in financial performance as it follows a strategy of operational excellence, better customer experience and greater brand alignment.
It is worth mentioning that "Zain KSA" recently signed an agreement with the Ministry of Finance, to postpone payments of the government’s entitlements due from the Company for the next seven years, estimated for SAR 5.6 billion, which will be used to reduce part of the financial obligations of the company and this will in turn result in the reduction of financing costs.