RAKIA Sukuk (continued...) - Islamic Finance News

Deals of the Year 2007 Handbook
Mada Leletisalat Islamic financing facility (continued...)
The guarantee facility was made available in one drawdown
to meet the initial funding commitment of 80% of the
license fee in accordance with the licensing schedule and
procedures set out in the CITC documents.
The subject guarantee was secured by cash collateral of
US$2.15 billion by the sponsors and shareholder loan of
US$288.5 million, deposited into an escrow account in favor
of the security agent acting on behalf of the fi nanciers.
The structure of the guarantee facility is summarized below:
Sources’ initial license fee payment Amount (US$ mil) %
Non-recourse guarantee facility 2,443.7 50
MTC shareholder loan 288.5 5.9
Sponsor cash equity 2,155.2 44.1
Total 4,887.5 100
Uses
Financial guarantee
(80% of license fee)
4,887.5 100
Total 4,887.5 100
*Until the joint stock company (JSC) that ultimately would
own the license is incorporated, a Saudi limited liability
company, Mada Leletisalat LLC was established, owned
by the sponsors. Upon establishment of the JSC, the payment
obligations of the LLC will be transferred to the JSC.
Stage II — IPO and fi nal license fee payment
The payment of the residual 20% of the license fee would
become due two weeks after the incorporation of the JSC.
The license fee would be deposited into escrow accounts.
At the time of license issuance, the guarantee facility would
terminate and be replaced by a bridge facility.
The bridge facility would be available for drawdown on
the basis that such drawdown will trigger the release of
the guarantee in favor of the CITC and the cancellation of
the liability of the guarantee banks under the guarantee in
accordance with the terms and conditions of the escrow
agreement. The security package for the bridge facility includes
the following:
• A pledge of the shares of the obligor (both LLC and
JSC) held by the sponsors
• An assignment of all shareholder loans
• A pledge and assignment of the obligors’ assets including
receivables, bank accounts and insurance
contracts.
The bridge facility will have a tenor of two years with bullet
repayment and a pricing of LIBOR + 125 bps for the fi rst 12
months, and LIBOR + 150bps for the remaining period, in
addition to a front-end fee of 70bps. The subject bridge will
be taken out in two years’ time via a six-year syndicated
facility.
The breakdown of the total cash license payment to CITC
is as per the table below:
Sources’ final license fee payment Amount (US$ mil) %
Non-recourse bridge facility 2,443.7 37.8
IPO/GOSI/PPA funding 1,866.7 28.9
Sponsor cash equity 2,155.2 33.3
Total 6,456.6 100
Uses
License fee 6,109.3 94.5
Surplus cash funds post-IPO 356.3 5.5
Total 6,456.6 100
Update on the IPO for Mada Leletisalat
The IPO for the company was successfully concluded in
February 2008.
The offering was hugely oversubscribed and the total IPO
proceeds, including participation by Public Pension Authority
of Saudi Arabia was SAR7 billion (US$1.87 billion).
GOSI did not participate and hence their portion was also
offered to the general public. The ownership of the company,
post-IPO, is as follows:
Name
% of ownership
• Mobile Telecommunications Company 25
• Saudi Plastics Factory
• Faden Trading Contracting Establishment
• Almarai Company
• Rakisa Holding Company
• Al Jeraisy Development Company Limited
• Architectural Elite Est for General
Contracting
• Ashbal Al-Arab Contracting Est
• Al Sale Al Sharkiyah
• Saudi Arabia Public Pension Authority 5
• General public through an IPO (scheduled
for October/November 2007)
25
45*
This case study was written
by Bahrain-based
ABC Islamic Bank
www.IslamicFinanceNews.com
Page 35