In a rare transaction for south-east Europe, Slovenia's largest mobile communications provider successfully borrowed €250 million through a flexible, international loan last September. The deal is the biggest
syndicated loan in Slovenia.
Through the mandated lead arrangers, Mobitel developed a strategy that used a mixture of domestic, international and institutional lending to achieve its refinancing needs. WestLB and Sumitomo Mitsui Banking Corporation (SMBC) arranged the international tranche, while Nova Ljubljanska Banka (NLB), Slovenia's largest banking group, managed the domestic slice.
The transaction was split into three tranches. The first was a €120 million, five-year tranche that was guaranteed by the European Investment Bank. The second, also for five years, amounted to €80 million while the final, seven-year tranche covered the remaining €50 million. The pricing was at 70bp over Euribor.
"The financing reflected the increased strength of the borrower," said David Testa, executive director for debt origination at WestLB. "Mobitel has developed from a tentative start-up to become a successful company with a strong cashflow."
The deal was partly ordered as a refinancing of Mobitel's earlier loans and partly to fund an extension of the company's infrastructure. "The story is very positive," said Testa. "Mobitel's first loan was a very structured and secured transaction." In 2001, West LB and SMBC arranged a €225 million loan for Mobitel. That deal had a much higher participation of institutional lenders than the €250 million financing.
For a small market like Slovenia, the size of the most recent loan is significant. Slovenian companies usually borrow in the range of €10-€40 million, amounts easily raised on the domestic markets. The support from the international markets for Mobitel was the "striking feature" of last year's refinancing deal, says Testa. The scarceness of Slovenian risk gave the loan a "rarity value".
The transaction will probably become a benchmark for future loan pricing in the region and will have an important effect on the syndicated loan market. The deal demonstrates that large-scale long-term financing can be made available in an advanced transition country.
Mobitel Slovenia has 1.5 million customers and dominates the Slovenian mobile telecommunications sector. The company is a wholly-owned subsidiary of Telekom Slovenije, the fixed-line Slovenian incumbent operator.
Slovenia can access a wide range of sources of financing thanks to its economic success and stability. However, higher risk financial instruments, such as long-term structured finance, equity and quasi-equity or public-private partnerships have yet to be developed further to support the private corporate sector.
Borrower: Mobitel Slovenia
Date: September 2004
Amount: E250 million
Loan terms: Five years; seven years
Loan pricing: Euribor + 70bp
Lead arrangers: NLB; SMBC; WestLB