Golden Telecom signs $275 million syndicated loan facility to continue its broadband rollout and regional expansion and finance acquisitions of Corbina and Fortland
26 Jan 2007
Moscow, Russia (January 26, 2007). Golden Telecom, Inc. (“Golden Telecom” or the “Company”) (NASDAQ: “GLDN”), a leading facilities-based provider of integrated telecommunications and Internet services in major population centers throughout Russia and other countries of the Commonwealth of Independent States (“CIS”), today announces that it has signed a $275 million five year syndicated loan facility with a consortium of international lenders.
Fifteen banks and financial institutions will participate in the syndication with Citibank N.A., London Branch and ING Bank N.V. acting as mandated lead arrangers. The issue was heavily oversubscribed, allowing the Company to increase the loan facility to $275 million from $200 million, as initially anticipated. The loan provides for an eighteen month commitment for utilization with quarterly repayments beginning twenty-four months after signing. The loan carriers interest at the London Inter-Bank Offered Rate (“LIBOR”) plus 1.5% per annum for the first twenty-four months and LIBOR plus 2% per annum thereafter.
The proceeds will be used, primarily, to finance the following projects:
- Acquisition and further development of Corbina Telecom
During 2005 and 2006, Corbina Telecom constructed the largest metropolitan Fiber-To-The-Building (“FTTB”) network in the world which covers 2.4 million apartments. Golden Telecom will use a portion of the funds to complete the acquisition of 51% of Corbina Telecom and to finance FTTB development in Moscow and other cities where construction has begun. The Company expects that within the next two to three years approximately 4 to 5 million households in Russia will be within the coverage area of the FTTB networks.
- Acquisition of Fortland and investment in digital TV broadcasting
In December 2006, the Company announced that it signed an agreement to acquire 65% of Fortland which holds licenses and frequencies for digital TV broadcasting using the Terrestrial Digital Video Broadcasting (“DVB-T”) technology in Moscow and St. Petersburg. The Company expects to roll out such services in 22 other major cities in Russia with a combined population of approximately 35 million people. Golden Telecom will use the funds to deploy
transmitters and launch services offering 80 to 120 television channels broadcasting both free and premium content.
- Continuous regional expansion and consolidation of alternative operators
Since September 2005, Golden Telecom has been acquiring, on average, one operator per month, which is in line with the Company’s strategy of continuous regional expansion. Part of the proceeds will be used for investment in existing operations to facilitate the Company’s organic growth in the major Russian and CIS cities.
Commenting on the transaction, Boris Svetlichny, Golden Telecom’s Chief Financial Officer, noted, “Apart from financing the Company growth, this facility will improve our capital structure, effectively lowering cost of capital and increasing future returns on equity. Successful entry into the credit market will tighten the Company’s links with the investment community enabling quicker and cheaper capital market transactions in the future.”
Commenting on this transaction, Jean-Pierre Vandromme, Golden Telecom’s Chief Executive Officer, noted, “In a fast growing market, as we currently see in Russia, it is vitally important to have the flexibility and financial resources to react quickly when market opportunities present themselves so as to invest timely in projects with sustainable growth. This loan, combined with the Company’s strong operational cash flows, will enable Golden Telecom to gain market share and strengthen its position as the leading alternative operator in Russia and the CIS.”
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