x Abu Dhabi, UAEFriday 28 July 2017

Zain Saudi tumbles as debt extension sought

What's Down: The Saudi Arabia-based telecommunications company headed for the lowest close on record after it was reported that it was seeking a fourth extension on $2.6 billion in debt.

Mobile Telecommunications Company of Saudi Arabia headed for the lowest close on record after MEED magazine reported the company known as Zain Saudi was seeking a fourth extension on US$2.6 billion in debt.

The shares of Saudi Arabia's third mobile-phone provider dropped 1.94 per cent to 7.60 riyals, set for the lowest close since the stock was listed in March 2008. Zain Saudi has tumbled 7.8 per cent in the past three days.

Zain Saudi said last month it was in "very advanced negotiations" with a syndicate of banks as well as potential investors to refinance the Islamic murabaha facility, which was first due in July.

Citing unidentified sources, MEED reported on its website that the company wrote to banks seeking a two-month extension.

Zain officials did not immediately comment yesterday.

"Until they secure an agreement with lenders, they'll just roll over the debt for shorter periods," said Asim Bukhtiar, the head of research at Riyad Capital.

"What would be surprising is if they say they can't agree on terms with the lenders, as that would create liquidity problems."

The company mandated Al Rajhi Bank, Banque Saudi Fransi, Arab National Bank and Standard Chartered to refinance the debt, said two bankers familiar with the matter .

Zain Saudi has posted full-year losses since starting operations in the largest Arab economy in 2008, according to data compiled by Bloomberg.

The company's third-quarter loss widened to 493 million Saudi riyals from 484m riyals a year earlier.

Seven analysts recommend investors hold the shares, while three have a sell rating and one says buy, according to data compiled by Bloomberg.

Zain Saudi shares have tumbled 32 per cent this year, compared with a 1.5 per cent gain for the benchmark Tadawul All Share Index.