VSNL's South African arm secures Rs 1,300 cr debt facility

New Delhi, Dec 13 (UNI) Videsh Sanchar Nigam Ltd (VSNL) today said its South African arm Neotel, has signed a Rs 1,300 crore bridging debt facility with a funding consortium of financial institutions.

The facility has been fully underwritten by the funding consortium comprising Nedbank Capital, the investment banking business of the Nedbank Group, Investec Bank Ltd and the Development Bank of Southern Africa.

The consortium will jointly finance Rs 900 crore of the debt, while further Rs 400 crore will be financed by the Industrial Development Corporation of South Africa.

The debt will be provided on a project-finance basis with a term of 18 months.

Neotel will re-finance the debt with a long-term facility after 12 months. Nedbank Capital, Investec and the Development Bank of South Africa have been appointed as the mandated lead arrangers for the long-term facility, which will be in excess of Rs 2,600 crore.

The debt is complemented by over Rs 1,300 crore of equity that will be contributed by the Neotel shareholders. The funds will be utilised for Neotel's network build out, which already consists of 1,300 km of optic fiber cable in the six main metropolitan areas.

This infrastructure was purchased from Transnet for Rs 165 crore earlier this year.

Neotel currently offers international voice and data transit services for other telecommunications operators. The initial enterprise services will be available in December this year.

Consumer services in select geographic areas will be offered in April-May 2007.

''This is the largest non-recourse facility for a start-up telecommunications project in the region, and one of the largest in South Africa to date. Attractive terms for the debt have been offered by the financial institutions to ensure that Neotel is allowed adequate time to establish itself in the market,'' the company said.

Kagiso Financial Services, in association with Rothschild South Africa, has acted as financial advisers to Neotel. The legal advisor to the company is Deneys Reitz, while Bell Dewar&Hall has acted on behalf of the funding institutions.

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