Smile Telecoms Secures R750 Million Lifeline to Avert Liquidation

Smile Telecoms
Smile Telecoms

Smile Telecoms, a Pan-African telecommunications group, announced on Thursday it has secured $51 million (R750 million) in fresh capital to avert liquidation and fund operations.

The company said its restructuring plan has been approved and agreed with the lenders.

Smile Telecoms said the debt restructuring plan sees an injection in fresh money funding from its majority shareholder, the Al Nahla, and rescheduling on debt repayment until post-March 2022.

Al Nahla, a Saudi Arabian-based company owns 49% of Smile. The PIC is a minority shareholder along with Renven Investment Holdings, a pan-African investment vehicle; Verene, representing Smile senior management and social entrepreneurs from South Africa; Telecom Investments, a Saudi Arabian investment company; Capitalworks, an alternative management company; the PIC; and Smile employees.

The fresh injection of $51 million in funding for operations will further enhance Smile’s position in its respective markets and energize its operations and support efforts towards achieving better performance, reads the statement.

The company has operations in Nigeria, Uganda, Tanzania, and the Democratic Republic of the Congo.

It was founded in 2007 by Irene Charnley and Mohammad Wajih Sharbatly, who both resigned in February 2021.

Last month, it emerged that Smile Telecoms is facing liquidation after the Public Investment Corporation (PIC) pulled its funding and would not sign an agreement that would see a further $51million injected into the firm.

For more read: Funding frown: Smile Telecoms faces the prospect of liquidation

In 2015 Smile raised $365-million (R5-billion) in new debt and equity financing – the largest amount of funding raised by a telecoms operator in Africa. This consisted of $50-million of equity funding from the PIC on behalf of the Government Employees’ Pension Fund (GEPF) and another part consisting of a $315-million, multitranche, multijurisdictional debt facility led by African Export-Import Bank, along with the Development Bank of Southern Africa, Diamond Bank plc, Ecobank Nigeria, the PIC, the Industrial Development Corp (IDC) and Standard Chartered Bank.

The PIC has invested both debt and equity into the firm. The equity investment has been impaired for the last two years and is currently worth R322 857 000, according to the latest annual report.

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