Saudi Telecom Company Issues Update on Sale of Indonesian Subsidiary
Saudi Arabia's Saudi Telecom Company (STC) has issued a brief notice clarifying details about its attempt to sell its Indonesian subsidiary.
In the statement, STC said that "In reference to the news reports that have recently been circulating in some local and foreign press, which mention that STC is seeking to restructure the loans of Axis Indonesia, where STC is the majority shareholder, STC would like to emphasize that there is no new significant development to be pointed out beyond what has already been announced earlier by STC on July 21, 2013 on the Saudi Stock Exchange (Tadawul)."
STC added: "It was stated that the negotiations for the sale of Axis were proceeding as authorized by the STC board of directors with a potential buyer, senior lenders, and other creditors to reach a satisfactory agreement to all parties."
The statement follows on from reports that STC, as the backer of loans made to Axis Indonesia was negotiating with banks to have the loans restructured and the amount outstanding reduced by as much as US$600 million.
STC backed the Islamic loan for its Indonesian subsidiary, Axis Telekom in 2011, but has since put the company up for sale, citing its poor performance in the local market.
STC owns 84.8% of Axis Telekom and has been asking the lenders to restructure a US$1.2 billion it underwrote to reflect the reduced value of the Indonesian company -- which would put the loan at around US$600-800 million.
The banks would have to absorb the loss.
The talks have reportedly delayed plans by XL Axiata to buy the company.
STC recognised a realized loss of SR705 million (US$188 million) on the Indonesian investment in its accounts in June, and put the company up for sale in July.