Etisalat International appoints mandated lead arrangers to fund USD 2.114 billion facility for PTCL acquisition

The mandated lead arrangers have fully underwritten the deal and are committed to fund the transaction. A consortium of Etisalat and Dubai Islamic Bank was appointed in June as the successful bidder for the stake being sold by the Government of Pakistan, and the 18-month bridge facility will be used to finance Etisalat's share of the final payment due around the end of August 2005.

In addressing Etisalat's financing requirements, an Islamic bridge facility has been structured by HSBC Amanah as a "share murabaha" using the underlying shares of PTCL for the trade transactions to effect the financing.

This financing represents the largest ever share murabaha in history, and is a landmark deal in the Islamic finance market. The competitive pricing and significant interest in the transaction from the financing institutions demonstrates the acceptance among the regional and international banking community of Islamic finance structures for prime corporate issuers such as Etisalat. Etisalat International has shown preference for Sharia compliant financing. The successful completion of the transaction bodes well for the development of the international Islamic finance industry.

Obaid Bin Mes'har, CEO of Etisalat International, said: "We are very pleased to announce this landmark finance deal, and we are proud to be associated with the most respectable names in the world of international finance. Their enthusiastic participation demonstrates their keen interest in Etisalat as well as the value of the PTCL acquisition"

Iqbal Khan, CEO HSBC Amanah, added: "We are excited to have concluded this landmark advisory assignment for Etisalat International finance. We commend the efforts of Etisalat International in promoting Islamic finance, and we believe this demonstrates the strategic alignment of the company with the regional culture and the growing Islamic finance industry."

HSBC Amanah, HSBC's Islamic finance division, was retained by Etisalat late June to formulate the finance plan for the acquisition, to structure the facility, and to advise on the Islamic debt raising exercise. Six of the seven mandated lead arrangers selected by Etisalat following a competitive bidding process managed by HSBC Amanah are: Barclays Capital, Calyon, Citigroup, Deutsche Bank, National Bank of Abu Dhabi, and National Bank of Dubai. HSBC Amanah joined this group once the terms and pricing were finalised, exercising its option to join the winning banks on equal terms.

In June this year, the consortium led by Etisalat out bid China Mobile and Singtel for all the B shares in PTCL which constitute 26% of the equity and 58% of the voting rights for Board nominations. The nearly US$ 2.6 billion bid procures management rights for PTCL, Ufone, the mobile operator, and Paknet, the ISP. Etisalat also won the second GSM license in Saudi Arabia last year and has since acquired management control and equity in Sudanese Kanartel, and Atlantique Telecom in West Africa.