(MEBG) – The Spanish-led consortium, Medi Telecom, has been granted a one billion Euro ($959 million) loan by ABN AMRO and SG Investment Banking. Last July, Medi Telecom won the right to supply Morocco’s first private GSM mobile telephone system, a project valued at $1.1 billion.
The two banks are responsible for arranging and underwriting the international commercial debt component of the project’s financing facilities, which consist of export credits, international and domestic commercial loans, as well as financing from the International Finance Corporation (IFC)—a member of the World Bank group.
The role of ABN AMRO will be to coordinate the international and local commercial loans, as well as the export credit facilities, which will support acquisitions from Spain, Portugal and Sweden.
The local BMCE Bank will undertake the domestic commercial loan facility.
As part of the project financing settlement, the IFC has agreed to provide A, B and C loans. The A and C loans, valued at one billion Euro ($960 million), will be granted directly by the IFC, who is the sole arranger of the two loans. The B loan, also managed by the IFC, will include the participation of several international commercial banks. This is the IFC's largest ever project financing commitment to a single borrower in the telecom sector.
The participating commercial banks will benefit in several ways from the IFC’s involvement in the project financing: The default rate is likely to be minimal as borrowers from the World Bank most often repay loans, so as to be granted further future lending. The IFC also receives favored treatment in issues of transferability and convertibility. Additionally, Morocco enjoys a tax advantage, as interest payments on loans from World Bank organizations remain tax-free.
Part of the funds will be used to repay two existing loans totaling Euro 660 million ($633 million), and the remainder will be used to further advance the Medi Telecom network that requires both equipment and capital.
Medi Telecom, which began operations on March 29th, already attained over 200,000 subscribers and hopes to double this figure by year-end. Maroc Telecom, currently State-owned though due to be partially privatized later this year, recently announced that the number of its subscribers had already reached one million.
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