The Public Investment Corporation (PIC) and Saudi Arabian investors are in last ditch talks to avoid a potential liquidation of Africa-focused telecommunications operator Smile Telecoms Holdings.
PIC, which owns a minority stake and is a creditor to Smile, must reach an agreement by the end of Wednesday over an outstanding put option with the Al Nahla group, the largest shareholder, according to people familiar with the matter.
If the two investors fail to reach a deal, the company could be forced into liquidation and lenders including a group of African banks could suffer losses on the bulk of about $250m senior loans, said the people, who asked not to be named because talks are private.
Smile Telecoms launched a restructuring plan in the UK in February. Al Nahla led a proposal to inject more than $50m cash in the company provided PIC extended the terms of an option to sell its stake to other shareholders for $45m, the people said.
The payment on the put option is due on March 24, they said. Without an agreement on the put option, the overhaul could fail.
“Smile Telecoms has embarked on a restructure plan, which the PIC supports subject to certain terms and conditions,” a PIC spokesperson said on Tuesday. “PIC continues to engage other shareholders in Smile Telecoms to find ways of preserving value for PIC clients.”
A representative for Smile declined to comment. Al Nahla didn’t respond to calls and e-mails seeking comment.
Founded in 2007, Smile Telecoms provides broadband services in Nigeria, Uganda, Tanzania and the Democratic Republic of Congo (DRC). PIC participated in a funding round in 2015 as the company raised equity and debt.
In February, Smile announced that its two co-founders, Irene Charnley and Mohammed Wajih Sharbatly, would step down from its board as it appointed restructuring specialists.
Bloomberg
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