Sunday 16 June 2019
Zain KSA Refinances and Converts US$600 Million Junior Credit Facility to a SAR 2.25 Billion Islamic Murabaha Facility
Zain KSA announced that it has closed a new Islamic two-year Murabaha Junior Credit facility agreement of SAR 2.25 Billion (the Facility) with a syndicate of five core Saudi Arabian and regional banks to refinance its existing US$600 million facility with the Industrial and Commercial Bank of China (ICBC) arranged in August 2016. The Facility is fully secured by a corporate guarantee from Mobile Telecommunications Company K.S.C.P (Zain Group) and the maturity could be extended for one year at the Zain’s KSA request.
Zain KSA has announced that it has closed into a $ 600 million facility refinancing agreement by converting into a SAR 2.25 billion Islamic Murabaha contract for a two-year renewable term.
In its press release, Zain KSA stated that it had entered into an Islamic Murabaha Refinance Agreement with a consortium of local and regional banks to replace the existing 2016 trade finance agreement with the Industrial and Commercial Bank of China. The successful conclusion of the Murabaha Agreement reflects the clear improvement in Zain KSa’s overall performance and exemplifies the trust and confidence of the Islamic financial community placed in Zain KSA’s successful turnaround and digital strategy. Banque Saudi Fransi (BSF) acted as the Documentation Bank of the Facility and Investment Agent. Al Rajhi Banking and Investment Corporation, Arab National Bank, BSF and First Abu Dhabi Bank PJSC (Saudi Branch), were the Bookrunners and Mandated Lead Arrangers for the Facility.
Zain KSA revealed that the Facility was oversubscribed, i.e. the financing coverage exceeded the company's request. The Facility is fully secured by a corporate guarantee from Mobile Telecommunications Company K.S.C.P (Zain Group)
HH Prince Nayef bin Sultan bin Mohammed, Chairman of Zain KSA, said, “The closing of the Murabaha Facility, which saw the transaction being oversubscribed, reflects the confidence of the financial institutions in the successful digital transformation strategy being carried out by Zain KSA. “
Prince Nayef also added that the agreement will support the positive developments in Zain KSA in terms of its financial and operational performance. "This agreement will allow the company better capabilities to explore growth opportunities in the digital services that may arise in the future."
Sultan bin Abdulaziz AlDeghaither, Chief Executive Officer of Zain KSA, said that the high coverage of Zain KSA's demand for refinancing reflects the confidence of banks and financial institutions in the company's plans and operational programs. "We are fully aware that this confidence is a testimony to the company's developmental growth, and that will drive us to exert even more efforts toward future achievements."
Recently, Zain KSA has achieved its best financial performance since the establishment of the company, enhancing- at the same time- its operational capabilities and signing a number of significant partnerships. The company also launched a several initiatives which aim at empowering women, qualifying and training national manpower, as well as successfully launching 5G technologies in the local market, demonstrating the company's vital role in the Kingdom’s ICT sector.
Exhibiting Zain KSA’s compliance to Shariah, this also comes midst of a significant shift in its operations and growth of its financial indicators. The company announced quarterly financial results with strong growth rates on all its financial indicators for the first quarter of the current fiscal year 2019, raising its quarterly net profit to about SAR 129 million, compared to SR 77 million for the same period of 2018, while total revenues rose to SR 2.1 billion in the first quarter, a growth of 24% over the same period of 2018.
During the period, Zain KSA maintained EBITDA of SAR 955 million in the first quarter, up 67% compared to SAR 571 million in the first quarter of 2018, reflecting EBITDA margin of 46%.