Liquid Telecom launches $820 million bond, EAIF commits to buy up to $50 million

Liquid Telecommunications Financing Plc has launched a bond and term loan financing package totalling a combined $820 million to support the growth and refinance its parent company's debt, Liquid Telecommunications Holdings Limited.

Liquid Telecommunications

The Liquid Telecommunications Financing Plc has launched a bond and term loan financing package totalling $820 million. The money raised will support the growth and refinance of its parent company’s debt, Liquid Telecommunications Holdings Limited.

The bond and financing package launched on Tuesday comprises $600 million senior secured notes and $220 million equivalent of South African-rand denominated secured term loans.

And one of the Big Three credit-rating agencies, Fitch Ratings Inc., has assigned the $820 million bond and financing package an expected ‘B+(EXP)’/RR4 rating. Liquid Telecommunications Holdings long-term issuer default rating is assigned B+ with a Stable Outlook.

In July 2020, Bloomberg had reported that Stive Masiyiwa is seeking buyers for a 20% to 34% stake of Liquid Telecommunications Holdings Ltd for as much as $600 million. He needed the money to repay a $375 million-loan that Public Investment Corp backed. But the coronavirus pandemic was hampering his efforts.

Masiyiwa is the founder of Econet Global, which owns Telecom Liquid Telecommunications Holdings Ltd.

According to the statement released by Liquid Telecom, the funds from the new financing are intended to support the continuous scale and expansion of its network capabilities and digital and technology solutions offerings across Africa.

The new financing package is also expected to help deliver long-term benefits to its growing number of enterprise, carrier and retail customers of over 143,000 across 13 countries. Liquid Telecom serves businesses of all sizes through a comprehensive and expanding service offering across wholesale data, enterprise, wholesale voice and retail segments, and a new technology solutions segment.

“Through a combination of organic growth and acquisition, Liquid Telecom has built Africa’s largest independent fibre network, stretching over 73,000 kilometres and connecting more countries on a single network than any other company”, Liquid Telecom said.

Last month, Liquid Telecom announced that it had acquired Quattro Business Solutions’ (QBS) operations in the Middle East and Africa. QBS is a leader in the fast-growing ecosystem of Microsoft Dynamics partners. The acquisition would allow Liquid Telecom to innovate and enhance its digital services offerings.

Similarly, in December 2020, Liquid Telecom completed the acquisition of Standard Bank’s Data Centre business. Africa Data Centers (ADC), a Liquid Telecom subsidiary, completed the purchase, strengthening its position as a data centre provider in Africa. ADC has operations in South Africa, East Africa and currently setting up shop in Nigeria and Ghana.

As soon as Liquid Telecom launched the $820 million bond and financing package on Tuesday, investors began to show interest. Chief among them is the Emerging Africa Infrastructure Fund (EAIF) who has committed to buy up to $50 million of the bond.

Acting through its agent Ninety One SA, EAIF, with the International Finance Corporation (IFC) and DEG-Deutsche Investitions-und Entwicklungsgesellschaft mbH (DEG), has committed to placing orders to purchase up to an aggregate $178 million in the new note offering.

This transaction is EAIF’s fourth large-scale transaction in Africa’s digital and telecommunications sector in the past 12 months. EAIF bought $40 million of the $600 million bonds Helios Towers Plc issued last year. It also invested $50 million in the $170 million bond issue of Sonatel S.A. EAIF had also loaned $40 million to the West Indian Ocean Cable Co.

“Growing Africa’s digital infrastructure is a key foundation stone in recovering the continent from the global economic devastation of COVID. EAIF has supported the growth of Africa’s digital and telecommunications sector since 2003”, Sumit Kanodia, an investment director at Ninety One, said.

“We have given support to projects including marine and terrestrial fibre optics, communications towers and satellites that have brought advanced communications to Africa and had significant economic development impact on many countries. Liquid Telecommunications is a dynamic and successful business we are pleased to support”.

In October 2020, the United Kingdom’s development finance institution and impact investor, CDC Group, had made an additional $40 million equity investment into Liquid Telecom. This was CDC’s second investment in Liquid Telecom; it had made an equity investment of $180 million in Liquid Telecom in 2018.

For the 12 months ended November 30, 2020, Liquid Telecom reported revenue and EBITDA (earnings before interest, taxes, depreciation, and amortization) was $773 million and $231.1 million, respectively ITWeb reported.


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