Dubai: The Tecom Group - the Dubai headquartered operator of free zones and industrial hubs - has refinanced an existing loan on 'more favourable term'. It has entered a new 5-year Dh7.6 billion unsecured loan facility and replacing the existing partially utilised loan of a similar size.
The switch will have a 'positive impact on the company’s cashflow profile', and providing the funds to 'execute its growth strategy'. Several leading UAE businesses have or are in the process of refinancing their debt exposures, even as the US Federal Reserve hit pause on an interest rate hike in June. (But the Fed did leave open the chances of more rate hikes in the year.)
Tecom's facility has been 'secured at more favourable terms, leading to immediate interest expense saving over the five-year period'. It provides drawdown flexibility until maturity and also increases the duration of the facility. Under the terms, the exposure will be split into an Dh4.4 billion term loan, equivalent to the amount already drawn down from the previous agreement.
Then there is the Dh3.2 billion revolving credit facility, equal to the existing undrawn amount. The facility has a bullet principal repayment structure, with the principal amount repaid at maturity.
"The new facility demonstrates our ability to leverage our strong financial standing and performance, market reputation and leadership position within the commercial real estate segment to take advantage of the ample liquidity in the UAE banking sector," said Abdulla Belhoul, CEO. "Securing the loan at more favourable terms is a reflection of the confidence the financial community has in our business and growth plans.”
Abu Dhabi Commercial Bank, Emirates NBD Capital, and Dubai Islamic Bank were the joint mandated lead arrangers.
"We entered into a loan agreement that will have an accretive impact on our bottom-line," said Michael Wunderbaldinger, Chief Financial Officer at Tecom Group. "The facility will also lower our financial costs, improve our cash profile and is more aligned with our funding needs over the coming period.”