Multisource success in Angola
In September 2008, Rand Merchant Bank (RMB), acting as arranger, together with Banco de Poupança e Crédito (BPC) as co-arranger, closed a US$80mn deal for the development of a new fibre-optic cable network to connect ten coastal cities and towns in Angola.
This landmark deal is a joint and collaborative effort between African and European funding institutions, export credit agencies and development funding institutions, and sets a new precedent for the Export Credit Insurance Corporation of South Africa’s (ECIC) involvement in encouraging African trade. This is the first deal ever concluded by ECIC under the ‘qualifying exporter’ criteria, whereby in an effort to promote regional development, no minimum local content applies to African projects involving South African exporters.
Although Angola Telecom is the sponsor of the project, BPC acts as the borrower and on-lends to Angola Telecom under a separate loan agreement signed between the two parties, with matching repayment profiles. The entire transaction involved close collaboration with the Angolan ministry of finance.
A variety of institutions were gathered to participate, including commercial banks, vendor finance, export credit agencies and development funding institutions. These included RMB, backed by the ECIC (US$15.5mn); the Development Bank of Southern Africa; Nordea Bank, backed by swedish export credit agency EKN; Swedish International Cooperation Development Agency (Sida); and Ericsson Credit. The average loan tenor of these commitments is 10 years.
“EKN has a long-term relationship with Ericsson and we are proud to be able to support the company’s export transactions,” comments Helén Seemann, director, large corporates at EKN. “This transaction is an example of how EKN can support Swedish exporters in difficult market situations, where the risks themselves are difficult.”
The new cable network system has been entitled Adones (Angola Domestic Cable Network System), and will be operated by Angola Telecom. The network is expected to run from Cabinda, on the north coast of the country, to Namibe on the southern coast.
The project is being undertaken by a consortium of companies, consisting primarily of Ericsson South Africa and Ericsson Sweden, although local sub-contractors are being used for civil works and other appropriate functions wherever possible. The cable, which is being buried beneath the sea bed along the coast, has an approximate total length of 1,464km. It will be connected to the SAT3 intercontinental cable that links the entire West African coast to Europe.
The telecom sector is an enabler for social development, and following the devastating effects of the civil war, there are certainly many benefits associated with improved telecommunications.
“Angola clearly faces social challenges – one of these is the rebuilding of infrastructure,” says Ato Gyasi of RMB. “RMB is proud to have co-arranged the funding for this project which, by providing a backbone network for mobile and broadband traffic covering around 70% of Angola’s population, will undoubtedly be an additional enabler for the social development efforts in Angola.” The intention is to extend the cable system to the Democratic Republic of Congo and the Republic of Congo, which would effectively connect both regions to the rest of the world.
Borrower: Banco de Poupança e Crédito for on-lending to Angola Telecom
Arranger: Rand Merchant Bank
Co-arranger: Banco de Poupança e Crédito
Additional lenders: Development Bank of Southern Africa; Nordea Bank; Swedish International Corporation Development Agency; Ericsson Credit.
ECA/Insurer: Export Credit Insurance Corporation of South Africa (ECIC); Swedish Export Credits Guarantee Board (EKN)
Law firms: Cliffe Dekker; Fátima Freitas
Tenor: 10 years
Date signed: Final tranche closed in September 2008