Bloomberg
Dubai


HSBC Holdings is advising Saudi Arabian telecom company Etihad Etisalat Co on talks with lenders after it breached a covenant on about 10bn riyals ($2.7bn) of debt, three people with knowledge of the matter said.
The covenant relates to the ratio of debt to earnings before interest, taxes, depreciation and amortisation, the people said, asking not to be identified as the information is private.
Mobily, as the telecom operator is known, asked banks to sign an agreement that they’ll not take any action against it this month, the people said. The banks declined the request, typically known as a debt standstill, they said.
“Mobily met with all lenders in January and February, but never requested standstill from any lender,” Serkan Okandan, deputy chief executive officer, said in e-mailed comments on Thursday. “Mobily commits to servicing all its contractual debt obligations in line with the existing facility agreements.” The company needs a reset on its debt covenants, an external auditors report said in a statement published on the Saudi stock exchange on Wednesday. Mobily has removed its chief executive officer and chairman since revealing accounting errors that affected financial statements for 2013 and 2014.
Mobily has suggested a meeting with banks in mid-March to discuss changing the covenants on its loans, the people said.
“We are continuously in contact with lenders,” Okandan said, adding there was no need for a specific meeting then.
The market regulator suspended shares in the company on Wednesday as it seeks an explanation for a discrepancy in Mobily’s 2014 results. The company reported a loss of 913mn riyals ($243mn) in a statement on February 25, after reporting a preliminary profit of 220mn riyals on January 21. The company has lost $9bn of its market value in the last four months.
Paul Harris, a spokesman for HSBC declined to comment.