Monday August 17, 06:50 PM

S. Africa's MTN lining up $4.5 bln loan for Bharti

LONDON (RLPC) - South African telecom MTN is in talks for a $4.5 billion syndicated loan to back the proposed merger with Indian mobile phone giant Bharti Airtel (BHARTIARTL.BO : 283.65 +2.65), a banking source close to the deal said on Friday.

MTN is in talks with several international banks over the deal, which is expected to be agreed on over the next two weeks.

The two companies, which have been working on a complex $23 billion cash and share swap for over two months, said earlier this month that exclusive talks would be extended until late August and that the terms of the potential deal may be adjusted.

The loan will comprise a dollar denominated tranche and a rand tranche, though the split is yet to be decided, the banker said.

A source familiar with the negotiations told Reuters last week that Bharti may increase its offer for a stake in MTN by between 5 and 10 percent.

Originally MTN was in talks for a loan worth up to $3.5 billion, as previously reported by Reuters Loan Pricing Corp. in July.

Under the complex initial terms, MTN and its shareholders would take a 36 percent interest in Bharti and the Indian firm would end up with 49 percent of MTN.

Bharti would buy about 36 percent of existing MTN shares at 86 rand each, plus half a newly issued Bharti global depositary receipt, to be listed in Johannesburg, for each MTN share.

Bharti and MTN hope that the deal will lead to a full merger, creating the world's third biggest cell phone group, with more than 200 million customers and combined revenues of $20 billion.