MTN Gains After Raising $1.3 Billion of Loans Before Bond Sale

  • Company’s stock posts biggest two-day advance since June 29
  • MTN hopes to start moving money from Iran by beginning of 2017

MTN Group Ltd., Africa’s largest mobile-phone operator by sales, climbed for a second day after raising more than $1.3 billion in loans before the potential sale of bonds.

The shares jumped 2.2 percent to 121.49 rand as of 12:29 p.m. in Johannesburg on Wednesday for the biggest two-day advance since June 29 and valuing the company at 225 billion rand ($16 billion). MTN is being provided with $1 billion and 4.8 billion rand from local and international banks and financial institutions, it said in an e-mailed response to questions Tuesday. MTN is on a roadshow in the U.S. and U.K. this week to gauge investor appetite for debt securities.

“The fact that MTN managed to secure the loans and attract funds from institutional investors bodes well,” said Sasha Naryshkine, a director at Vestact Ltd. in Johannesburg, which holds MTN stock. “This might also help MTN to get a good outcome in terms of selling bonds. Investors will look for yields without too much risk, and things are looking much better for MTN. The timing is good for a MTN bond sale.”

MTN’s move to attract funding comes after the company this year posted its first-ever half-year loss, partly caused by an agreement to settle a record 330 billion naira ($1 billion) fine in Nigeria. The stock has declined 29 percent over the past 12 months amid concern over the penalty and a subscriber base of 233 million that didn’t grow in the six months through June. The wireless operator is also struggling to repatriate 15.4 billion rand tied up in its Iranian unit.

MTN and its subsidiaries have $3.2 billion of debt and interest payments due by the end of July next year, according to data compiled by Bloomberg. That includes a $2.75 billion bridge-term loan, a 2 billion-rand senior unsecured loan and 1.25 billion rand of bonds, the data show.

Balancing Act

“These financing arrangements are in line with MTN’s funding strategy, which aims to improve its debt maturity structure on an ongoing basis and maintain adequate bank facility headroom to support its credit rating,” the company said. “MTN’s funding strategy further aims to maintain a balance of operating currency and dollar-denominated debt.”

Two loan deals were signed on Aug. 25, according to data compiled by Bloomberg. A facility for $250 million matures in 2019 and a $750 million agreement closes in 2021, the data show. In both instances the agent for the facilities was Citigroup Inc.’s global markets unit, which was also a joint book runner along with Bank of America Merrill Lynch. The lead arrangers for the credit included units of Barclays Africa Group Ltd., Mizuho Bank Ltd., Societe Generale SA and State Bank of India.

There were 10 lenders in total, according to the data. They included Bank of Tokyo-Mitsubishi Ltd., JPMorgan Chase & Co., Standard Chartered Plc and Sumitomo Mitsui Banking Corp.

Iran Progress

MTN remains confident it will be able to move money out of Iran “in the short to medium term,” the company said on Tuesday. It is in the process of putting in place “the appropriate governance structures to facilitate the repatriation of funds,” it said.

The process has been more complex than it initially thought because Iran doesn’t have ties with international banks, MTN’s outgoing Chief Financial Officer Brett Goschen said at the company’s first-half results presentation on Aug. 5. “Every week we are getting a little bit closer, but it will take us at least five to six months to get the money out once we start the first tranche.”

MTN expects to start moving the funds out of Iran during the first half of 2017, according to Goschen. He will leave at the end of the month and a successor has yet to be appointed.