Saudi Telecom’s (STC) Indonesian unit has picked Moelis & Co to advise it on negotiations with lenders as the operator steps up efforts to restructure a USD1.2 billion Islamic loan, two sources familiar with the matter said.
STC backed the loan for Axis Telekom, its Indonesian arm, in 2011.
But Axis’s poor performance has put the company in breach of some of the terms, four sources aware of the matter said.
STC has asked banks to restructure the debt to reflect its true value of USD600-USD800 million but the lenders, led by Deutsche Bank,have refused, and are considering alternative ways of recovering their money, the sources said.
New-York based Moelis was involved in the USD25 billion debt restructuring of Dubai World in 2010 and advised creditors on the restructuring of a USD1 billion Islamic bond by UAE-based Dana Gas last year.
Banks are demanding full repayment of the loan citing a “letter of support” from Saudi Telecom when the loan was granted in 2011.
Saudi Telecom is holding separate negotiations to sell its 84-percent Axis stake to Indonesia’s PT XL Axiata.
Moelis reached out to the creditor banks about three months ago and has been involved in the negotiations on behalf of the unit since then, one of the sources said.
“Their (Moelis’) involvement clearly shows Saudi Telecom is serious about getting this loan restructured,” the source said.
Saudi Telecom, Axis and Moelis were not available for comment on Wednesday.
The sources did not say whether the banks had appointed an adviser for the talks.