Batelco teamed up with Kingdom Holding Company, chaired by Prince Alwaleed bin Talal, to bid for Kuwaiti telco Zain’s 25 percent stake in Zain Saudi.

The sale is a key condition of UAE telecoms firm Etisalat’s $12bn offer for a 46 percent stake in Kuwaiti Zain as both firms operate in the kingdom.

“Batelco Group, based on proposals received from financial institutions, is confident that it has the capability to raise debt up to $1.2bn,” Batelco CEO Peter Kaliaropoulos said in an e-mail.

“Events in the last few weeks may increase in the short term the cost for such financing but based on feedback from (Gulf) and international banks, there is healthy interest and a competitive spirit, from banking partners to deliver the required financing.”

Middle East unrest, including in Bahrain, has raised risk premiums. The escalating political tension has closed Bahrain’s access to international capital markets and banks are nervous of taking any Bahraini risk in a week.

Banking sources said earlier that Batelco faced difficulties raising international financing for its purchase of Zain’s Saudi assets due to political tension in Bahrain.

“Any fundraising exercise by any Bahraini borrower will prove difficult now in any credit market. There is no price for Bahrain today - I would not even try to do a deal for Batelco or any Bahraini name today,” a head of loan syndicate said.

If Batelco cannot finance the purchase, it could scupper Etisalat’s $12 billion bid for Zain unless another buyer can be found, bankers said.

“The question is whether Batelco has the financial means and the strategic intention to go ahead. If Batelco and their partners have cash available the acquisition might be done, if they don’t, I really don’t know,” the loan syndicate head added.

Kingdom Holding is seen as having the resources to pay for its share of the bid, but bankers told IFR Gulf Briefing that Batelco will definitely need to raise outide financing.

Batelco and Kingdom Holding will have to pay for Zain Saudi Arabia in around six weeks after completing due diligence, according to filings by Kingdom to the Saudi stock exchange.