Securing a refinance deal for an operator in Saudi Arabia

The problem

Zain Saudi Arabia (Zain KSA) launched GSM mobile operations in August 2008 and is now the third-largest mobile operator in the Kingdom of Saudi Arabia.

The mandated leading arrangers of a USD2.5 billion Murabaha refinancing facility requested our support over four phases. First, we were asked to prepare a 'Red Flag' report. Then we were asked to undertake a full commercial and technical due diligence report, before producing a banking case and finally presenting the results to investors during the syndication phase and answering any follow-up questions.

The solution

We began by reviewing the management business plan in the context of market conditions, international benchmarks and the actual and expected future performance of Zain KSA. This information formed the basis of a Red Flag report that examined the company's anticipated future performance.

Building on the understanding of Zain KSA we had developed during the Red Flag stage, we then carried out a full due diligence exercise. This included a thorough review of the Saudi Arabian market, an assessment of Zain KSA's historical performance, a review of its commercial, marketing and technical strategies, and a detailed analysis of Zain KSA's business plan (including a rigorous evaluation of its main revenue drivers, COGS, opex and capex projections).

One of the key issues in refinancing deals is to give investors a clear understanding of any potential downsides of the business, as well as the ability of the company to repay the funds raised if events don't go according to plan. Based on our research, we developed a revised banking case and sensitivity test that constituted the basis for the structuring of the Murabaha facility and for the syndication process.

The result

We presented our findings to a panel of prospect investors during the syndication phase of the deal and answered their questions following the presentation.

The client raised the USD2.5 billion Murabaha facility required. The transaction was a landmark deal in the region in 2009, and certainly one of the most visible in the telecoms field.

The team

The project leader has carried out more than 40 due diligence projects in the past 4 years and brought a wealth of experience to this assignment.

Analysys Mason has conducted a remarkable 200 due diligence projects in the past 5 years, many of which have benefited from the different perspectives and experiences of Analysys Mason staff from offices around the world. Combining talent from different offices to create the ideal skill set for a project is a key part of our approach. The bottom line is that we don't think geography should get in the way of results.