DBS and Bank Mandiri yesterday (Tuesday) closed the syndication of a $215 million loan to PT Mitra Global Telekomunikasi (MGTI). The banks are joint mandated co-ordinating arrangers of the loan, which has been syndicated out to six other banks: ABN AMRO, Bank Danamon, Bank DBS Indonesia, Bank Internasional Indonesia, ING Bank and Bank Rabobank International Indonesia.
The syndicated facility has a tenor of five years and pays an interest rate of Libor plus 6%. It is an amortising loan with a three month grace period. The facility refinances a bridge loan that DBS extended to MGTI when Alberta Telecommunication acquired it. That deal also closed today.
Alberta is an investment company indirectly controlled by Edwin Soeryadjaya, a well-known Indonesian tycoon. In September last year he announced that Alberta would be buying MGTI from its shareholding group, which comprised NTT, Telstra, Indosat, Widya Duta Infotel, Itochu and Sumitomo. The consideration for that purchase was $266 million, which according to Brent Smith, co-head of investment banking at DBS Bank, was financed offshore by a further DBS loan. DBS was also the financial adviser on the acquisition.
The deal brings to a close the saga of the MGTI KSO, one of the five ill-starred foreign owned joint ventures established in Indonesia in the 1990s to roll out fixed line phone services throughout the country. A plethora of the biggest international telecom firms all lined up to take part and invest, only to pull out a few years later once the devaluation of the rupiah made the projects' dollar debts unserviceable.
The fact that this KSO has now been reworked with a new revenue sharing agreement between Telkom and Alberta has made it fundamentally more financeable. "We are delighted to be given the opportunity to advise on, structure and lead arrange the financing for this landmark transaction," says Smith. "The fact that eight leading names in the financial community have committed to this syndicate is testimony to the growing confidence in Indonesia's economy and growth prospects."
The deal comes hot on the heels of last week's $350 million bond deal for Indonesian mobile operator Excelcomindo. As that deal showed, financiers and investors are once again willing to look at the sector in a country with only a 15% penetration rate and a rapidly growing economy.