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Zain Saudi Gains to 3-Week High After Debt Payment: Riyadh Mover

Mobile Telecommunications Co. of Saudi Arabia rose to the highest level in more than three weeks after its Kuwaiti parent company settled a debt on its behalf.

Shares of Saudi Arabia’s third mobile phone provider known as Zain Saudi gained 3.1 percent to 8.25 riyals, the highest since Nov. 24, at the close in Riyadh. The stock was the third most-traded by volume on the benchmark Tadawul All Share Index, which declined 0.2 percent.

Kuwait-based Mobile Telecommunications Co. said Dec. 16 it paid off $231 billion for its Saudi affiliate to ease the company’s financial burden. The Riyadh-based phone company is seeking a fourth extension on $2.6 billion in debt, MEED magazine reported Nov. 26, sparking an 8.4 percent drop in the shares that week. The company said in October it was in “very advanced negotiations” with a syndicate of banks and potential investors to refinance the Islamic murabaha facility, which was first due in July.

The payment “alleviates pressure” on Zain Saudi as it negotiates a refinancing agreement, Kristle-Jo I. Sreik, a Beirut-based equity analyst at Audi Saradar Investment Bank, said by e-mail. “The facility will be subordinated and hence will be paid back to Zain Group post-murabaha payment, aiding in strengthening Zain Saudi’s negotiations with the lenders.”

The company mandated Al Rajhi Bank, Banque Saudi Fransi, Arab National Bank and Standard Chartered Plc to refinance the debt, two bankers familiar with the matter said in May. Zain Saudi has posted full-year losses since starting operations in the largest Arab economy in 2008, according to data compiled by Bloomberg. The Riyadh-based company’s third-quarter loss widened to 493 million riyals ($131 million) from 484 million riyals a year earlier.

The phone company’s shares tumbled 26 percent in 2012, compared with a 6.9 percent gain for the Saudi index. Seven analysts recommend investors hold the shares, while three have a sell rating on the stock and one advises buying it, according to data compiled by Bloomberg.

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