THE Royal Group has completed the purchase of its joint-venture partners' 61.5 percent stake in mobile-phone company Mobitel, also known as CamGSM, through what advisers on the deal say is Cambodia’s largest-ever corporate acquisition and debt-leveraged buyout.
The purchase of Luxembourg-based Millicom International Cellular SA’s 58.4 percent stake in Cambodia’s leading mobile- service provider by users and an additional 3.1 percent owned by small shareholders was announced by the Nasdaq-listed global telecoms operator late Thursday.
The deal, which gives the Royal Group 100 percent control of Mobitel, the operator of the Cellcard network, was financed through a US$421 million senior debt facility arranged by Standard Bank Plc and Australia and New Zealand Banking Group Limited, according to Cambodia-based investment firm Cambodia Capital.
The firm, which is an affiliate of Indochina-focused financial services provider Lotus Capital, acted as financial adviser to Royal Group on the acquisition and associated financing.
The loan covers the $346 million cash purchase of the Millicom stake and refinances debt held by Mobitel, including a $100 million syndicated loan arranged by the International Finance Corporation (IFC) in July 2008.
The loan, which was to upgrade and expand the company’s cellular network, had not been fully drawn.
Royal Group Chief Financial Officer Mark Hanna declined to comment on the deal Thursday.
Cambodia is now on the radar for international investors.
Andrew Ranken, a founding partner in Cambodia Capital, described the deal as a landmark transaction for Cambodia.
“The acquisition and associated financing are the largest ever in Cambodia and demonstrate that Cambodia is now on the radar for international investors,” he said.
“The financing sets an important benchmark for the market and should help to improve access to capital for quality Cambodian issuers like CamGSM.”
An international group of investors including Cambodian fund Leopard Capital invested in the facility, a source involved in the deal said.
Leopard Capital, founded in 2007 by Douglas Clayton, manages almost $31 million in committed capital from global investors, according to the fund’s Web site.
Standard Bank’s head of Asia telecoms and media, Tom Fuller, said it was a breakthrough transaction for Cambodia.
“Successfully arranging this facility for Cambodia’s number one telecom operator is evidence of Standard Bank’s continued commitment to being a leading financial institution in the emerging markets,” he said.
According to data provider Thomson Reuters, only eight syndicated loans had previously been completed in Cambodia, including the IFC loan to Mobitel.
The deal also includes Millicom’s stake in Royal Telecam International Co and Cambodia Broadcasting Service Co, which operates television network CTN.
It values the telecommunications and television broadcasting assets at an enterprise value of $605 million, or 7.1 times estimated 2009 earnings before interest, taxes, depreciation and amortisation, Millicom said in announcing it had reached a deal to sell the stake to Royal Group in August.
Sources in the industry have said the sale price, which was agreed amid heavy interest from rival operators, including Japan’s cash-rich NTT DoCoMo, was a good deal for Royal Group.
Millicom has partnered with the investment and development firm in Cambodia for 14 years but announced in May that it planned to divest its Southeast Asian assets to concentrate on emerging markets in Africa and Latin America.
Millicom has also sold its Sri Lankan operations to UAE-based telecommunications company Emirates Telecommunications Corp, or Etisalat, for $155 million and has agreed the sale of its Laotian operations to Russia’s JSC VimpelCom for $65 million.
ANZ and Royal Group are partners in ANZ Royal Bank in Cambodia, which was not involved in the syndicated loan.