Kazakhtelecom (Kazakhstan) signed an agreement on obtaining a syndicated loan for $110 mn

/ИРБИС, September 30, 03/ - The National operator of communication Kazakhtelecom spread a press release according to which today (On September 30) Kanat Nurov, the vise president and Chief Financial Director of Kazakhtelecom and Michael Davey, the Country Manager of European Bank for Reconstruction and Development signed loan agreement on giving to national operator of communication a syndicated loan for $110 mn. The organizer of the loan is EBRD, and co-organizer - Standard Bank London. Press release specifies that this event is final stage of negotiations that started after management of the company was advised to attract a long-term debt for refinancing of its obligations. As a result, on April 18, 2003 he general shareholders' meeting of Kazakhtelecom approved management's decision (made on January 29, 03) about obtaining a syndicated loan from EBRD. The main purposes of syndicated loan are restructuring of an existing debt portfolio to reduce its costs, refinancing of short-term obligations and changing them into long-term, and improvement of conditions of a signed earlier loan agreement with EBRD, what will lead to significant improvement of financial-economic activity of the company. According to company's information, the first proceeds in amount of USD95 mn will be adapted in November of the current year, and in particular, will be directed towards refinancing (advance repayment) of costlier loans, including obligations on investment credit of EBRD for development of communications network dated December 19, 99, adaptation of which comprised $25 mn. Besides, the rest amount of a loan ($15 mn) will be used for financing of broad-scale modernization of communication networks of the country. The adaptation of this amount is planned for 2004. "Total period of financing is 7 years, including two years deferral on repayment of the main debt, i.e. beginning of main debt repayment since September 2005. The given loan provides for LIBOR+3.55% interest rate, i.e. less than 4.95%APR. Taking into account the fact that short-term loans are mostly refinanced, offered conditions of syndicated loan are more preferable and will allow to reduce the cost of funds to the company, increase the share of financing at the expense of long-term borrowing, and as a result, financial position of the company will improve. Regardless the recession at communications markets across the world and planned liberalization of telecommunications sector of Kazakhstan, the management of the company succeeded in obtaining a loan with more advantageous conditions thanks to stable and dynamic growth of the trend showing financial position improvement as well as creditors' high estimates of the quality of management and future predictions of company's activities. Thus, at present time according to annual financial results Kazakhtelecom outperformed such famous world communications operators as Deutche Telecom and France Telecom", - press release mentions. Press release also says that Kazakhtelecom leads conservative policy on attracting loans, regardless high credit rating of the company. Thus, according to internal policy the whole amount of borrowed funds, and not only long-term loans. Should not be more than shareholder's equity and by estimations by the end of a year total borrowed capital will equal to 80% of total equity". The press release especially points to the fact that EBRD loan for a total amount of $110 mn is given to Kazakhtelecom without any guarantees from the Government of the Republic of Kazakhstan and other financial institutions. Principal activities of the company: telephone, telegraph, television and radio communications of all types. [2003-09-30]