Airtel receives N50bn loan ahead July 4 listing

A number of Nigerian banks have offered credit facility worth N50 billion to Airtel Nigeria, a telecom company, which plans to list its shares on both the London Stock Exchange (LSE) and the Nigerian Stock Exchange (NSE) on July 4, 2019.

In its offer prospectus, the firm said the loan agreement was signed on June 17, 2019, stating that the banks would allow it to make a repayment in five years, with two-year moratorium.

“Airtel Nigeria entered into a bank facility agreement for an amount of N50 billion, which is available for a period of 180 days from the acceptance of the offer and has a tenure of five years inclusive of a 24-month moratorium on the principal amount,” it said.

While the purpose of the facility was not stated, the Group described the telecom industry as a capital-intensive one that required substantial amounts of capital and other long-term expenditures.

According to Airtel, such expenditures are related to the development and acquisition of new networks and the expansion or improvement of existing networks.

It noted that the group’s capital expenditures were $630 million, $411 million and $395 million in each of the years ended March 31, 2019, 2018 and 2017, respectively.

Airtel added that it had financed the expenditures in the past through a variety of means, including banking facilities, particularly at the operating company level, accessing debt capital markets, and to a lesser extent, through accessing equity capital markets.

Airtel, which is Nigeria’s third largest telco, said it intended to use the net proceeds from its Initial Public Offer principally on the reduction of debt of $750m and achieve a targeted leverage ratio of 2.5x, based on underlying EBITDA for the year ended March 31, 2019.

It highlighted other objectives of the issue of ordinary shares as a way to the establishment of an independent capital structure and governance framework.

The company said the Nigerian offer consisted of an institutional offer only, and as such, shares would be offered to qualified institutional investors and high-net worth investors in Nigeria, as defined in Rule 321 of the Securities and Exchange Commission Rules by way of book building.

According to Airtel, 501.125 million and 716.406 million shares are on offer to Nigerians, naming the issuing houses for the offer as Barclays Securities Nigeria and Quantum Zenith Securities Investments Limited.