JEDDAH, 4 September 2004 — The National Commercial Bank (NCB) and Samba Financial Group have signed an SR10.4 billion guarantee facility agreement with Etisalat Consortium, according to the NCB.
The guarantee, issued in favor of the Communications and Information Technology Commission (CITC), relates to the license fee for Saudi Arabia’s second (GSM) mobile and 3rd generation (G3) business licenses, which the Etisalat-led consortium had won recently.
The facility deal, signed on Tuesday, guarantees 80 percent of the SR12.94 billion license fee to be paid by Etisalat Consortium to CITC under the terms of the licenses.
In a related transaction, Etisalat Consortium recently awarded a mandate to a 9-bank group of Saudi, Gulf and international banks to fund a bridge Islamic facility for an amount of $2.35 billion (SR8.8 billion) to partially finance the license fee and the consortium’s rollout needs.
The winning bank group consists of the NCB, Samba, Al-Rajhi Banking and Investment Corporation, Citibank, Emirates Bank, Kuwait Finance House, Abu Dhabi Islamic Bank, Bank Al-Jazira, and Dubai Islamic Bank. The facility documentation is expected to be signed by the lending banks and Etisalat consortium within a few weeks.
The SR8.8 billion funding will partially replace the SR10.4 billion guarantee facility arranged by Samba and the NCB.
Etisalat UAE is the manager and operator for the second GSM licensee company and has expressed a strong preference for Shariah compliance in its business dealings. The bank group has therefore put together the $2.35 billion bridge facility as an Islamic financing. It will be the largest corporate loan in the Middle East market and the largest Islamic financing done to date.
Under the $2.35 billion Islamic facility, the NCB and Samba are the local book runners while Citibank and Emirates Bank will be the international book runners. The NCB also acts as Escrow agent and Modareb under the facility.
Kuwait Finance House is the co-Modareb. The documentation, offshore account bank, security agent and Shariah coordinating banks’ roles are distributed among the bank group. BNP Paribas acted as a financial advisor to Etisalat consortium in this deal.
The $2.35 billion facility will be widely syndicated with Saudi and regional banks expected to show strong interest in participating in the facility.
Etisalat consortium will also offer 20 percent of the shares of the Etisalat Operating Company, to be established shortly, to the public through an Initial Public Offering (IPO) expected to be launched by Etisalat within the next few months, the NCB said.