Zain OKs joint offer for Saudi unit

Kuwaiti telecom firm Zain said Bahrain Telecom (Batelco) and Kingdom Holding would have to guarantee part of Zain Saudi's debt and infuse more money to buy 25 per cent of the Saudi operator.

Zain said on Tuesday that the consortium led by Saudi billionaire Prince Alwaleed's Kingdom Holding and Batelco would pay $1.2 billion for the stake and guarantee $961 million of Zain Saudi debt owed to Zain, terms starkly different from that laid out by the consortium a day earlier.

On Monday, Kingdom Holding said Zain's board had approved a $950 million offer for its Saudi assets, removing a regulatory hurdle for the Kuwaiti telco's $12 billion stake sale to UAE's etisalat.

"The majority of the board gave an initial approval to the offer under conditions put by Zain, most important of which is taking over of direct guarantees from Zain group to Zain Saudi, worth about $961 million," Zain said in a statement to the bourse.

Kingdom and Batelco would also have to pump additional funds into Zain Saudi, the statement said, which has a $3.8 billion debt pile.

Zain must sell its quarter stake in Zain Saudi as part of a regulatory requirement to avoid an overlap with etisalat, which also operates in the kingdom through affiliate Mobily.

The etisalat deal has been plagued by delays, including a lawsuit from unhappy Zain shareholders, and the Abu Dhabi-based telco has twice extended a self-imposed Jan. 15 deadline to finish due diligence. Etisalat reiterated earlier this month it was still interested in the Kuwaiti firm.
 
Complex deal

Zain said the due diligence process was expected to take 30 days and would start after a final agreement is reached and after the approval of Zain Saudi's board.

"We are working on the offer, and we know what we are offering. The only cash portion of the offer is $950 million," Batelco's Cheif Executive Peter told Reuters on Tuesday, after Zain's announcement.

"Upon completion of due diligence, we will then submit a binding offer. Till such stage, we are not commenting further about any loan guarantees or other non-cash terms and conditions which may be involved in a deal of this size and complexity," Kaliaropoulos said.

Zain Saudi, which also competes with Saudi Telecom (STC), has racked up mounting losses since launching services in August 2008.

Kingdom and Batelco, whose bids to buy Zain's Saudi operations were rejected last month, teamed up on Sunday to make the joint bid for the assets.

A third bidder, a consortium led by Al Riyadh Group, was not considered as it was unclear who was behind the group.

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