With the March 25th deadline set for exclusive talks between Bharti Airtel and Zain fast approaching, Airtel has announced that it has tied up the entire financing requirement of $8.3 billion for acquiring Zain’s Africa unit. According to the company, the financing was oversubscribed, with major international banks committing to underwrite the total amount. So far, indications have been positive that the deal will go through, particularly given the lack of discomfiting noises from various governments involved, unlike in case of Bharti’s merger talks with MTN last year.
Standard Chartered Bank, Barclays and the State Bank of India Group have underwritten $7.5 Billion of the financing. The State Bank of India has also agreed to give Bharti up to $1 billion equivalent in rupees to cover transaction costs. Other underwriters include ANZ, BNP, Bank of America Merrill Lynch, Credit Agricole CIB, DBS, HSBC, Bank of Tokyo Mitsubishi UFJ and Sumitomo Mitsui Banking Corporation.
Airtel has set an enterprise value of Zain Africa at $10.7 billion, with $10 billion to be paid on closing of the deal, and $700 million to be paid one year after the conclusion of the deal. Airtel expects a payout of around $9 billion, based on an estimate of $1.7 billion in debt, as of 31st December 2009. Sudan and Morocco are not expected to be a part of the deal.
Bharti Airtel has also applied for India’s 3G auction, set for April 9th.