MTN rakes in R6bn for Investcom

Johannesburg, 06 Jul 2006

South African cellular provider MTN has raised R6.3 billion in the South African corporate bond market to fund its takeover of Middle East cellular firm Investcom.

In what was the mobile company`s first foray into the local debt-capital market, it succeeded in raising the biggest amount in this market`s history, it says.

MTN had previously indicated in a statement to the JSE that it would be happy raising between R6 billion and R8 billion through this mechanism.

"Total book size exceeded R10 billion, however, giving consideration to other available funding in respect of the Investcom transaction, the final issue size was settled at R6.3 billion, split between a R5 billion four-year bond and [a] R1.3 billion eight-year bond," it said.

MTN said at the beginning of May that it aimed to buy the Beirut-based company, which operates cellular networks in 10 Middle Eastern and African countries for $5.53 billion.

The bonds were priced at spreads of 1.45% and 1.50% above the government R153 and R201 benchmarks respectively.

MTN has recently come under fire over its bond issue as newspaper reports alleged it was unethically manipulating the bond market by not accepting all the bids.

An MTN spokesperson could not be contacted for comment, but had previously said: "Between the bond issue and our bank facilities we have raised sufficient cash to meet the cost of the Investcom acquisition."