KARACHI, Aug 9: Etisalat International on Tuesday announced the appointment of mandated lead arrangers to fund $2.114 billion facility for financing its acquisition of 26 per cent equity in Pakistan Telecommunication Company Limited (PTCL). A press release issued by Etisalat on Tuesday quashed rumours at the Karachi stock market that the PTCL buyer had sought an extension for making payment for PTCL. Due to the rumours and an overall market slump, the PTCL share on Tuesday declined by Rs1.55 at Rs60.65.

The press note stated that Etisalat International, the investment arm of Emirates Telecommunications Corporation (Etisalat), advised by HSBC Amanah, on Tuesday appointed a group of seven banks to act as mandated lead arrangers in a $2.114 billion facility to finance 90 per cent of its shares in the acquisition bid for a 26 per cent stake in PTCL.

“The mandated lead arrangers have fully underwritten the deal and are committed to funding the transaction,” Etisalat stated. It said that a consortium of Etisalat and Dubai Islamic Bank was declared in June as the successful bidder for the stake sold by the government of Pakistan, and the 18-month bridge facility would be used to finance Etisalat’s share of the final payment due around the end of August 2005.

The press release said that HSBC Amanah, HSBC’s Islamic finance division, was retained by Etisalat in June to formulate the finance plan for the acquisition, structure the facility and advise on the Islamic debt raising exercise. Six of the seven mandated lead arrangers selected by Etisalat “following a competitive bidding process managed by HSBC Amanah” include: Barclays Capital Calyon, Citigroup, Deutsche Bank, National Bank of Abu Dhabi and National Bank of Dubai. HSBC Amanah joined this group once the terms and pricing were finalized, exercising its option to join the winning banks on equal terms.

Etisalat observed that in addressing its financing requirements, an Islamic bridge facility had been structured by HSBC Amanah as a ‘share murabaha’ using the underlying shares of PTCL for trade transactions to effect the financing. The buyer pointed out that this financing represented the largest ever share murabaha in history, and was a landmark deal in the Islamic finance market.

Etisalat International was said to have shown preference for Shariah compliant financing. “The successful completion of the transaction bodes well for the development of the international Islamic finance industry,” the company said, adding that the competitive pricing and significant interest in the transaction from the financing institutions demonstrated the acceptance among regional and international banking community of Islamic finance structures for prime corporate issuers, such as Etisalat.

The press note also contained congratulatory comments by Obaid Bin Mes’har, CEO of Etisalat International, and Iqbal Khan, CEO, HSBC Amanah.

In June this year, the consortium led by Etisalat outbid China Mobile and SingTel for shares in PTCL, which constitutes 26 per cent of the telecom’s equity and 58 per cent of the voting rights for board nominations. The nearly $2.6 billion bid procured management rights for PTCL, Ufone, the mobile operator, and Paknet, the ISP.