TBILISI

Silknet, a leading telecommunications operator in Georgia, plans to issue $300 million worth of five-year Eurobonds on January 31, the company said.

It said that the interest rate is 8.375 percent and its holders will receive the coupon twice a year. The company plans to use the net proceeds of the issuance for refinancing of its outstanding loans and borrowings, including repayment of its outstanding 11 percent notes due April 2024 as well as for corporate purposes.

The transaction is Silknet’s second international bond offering, following its debut $200 million bond issue in 2019. The bookrunners and joint lead managers for the offering are J.P. Morgan Securities plc and UBS AG London Branch, with TBC Capital LLC also acting as joint lead manager.

According to Silknet, the offering has already attracted an array of high-quality institutional investors globally.

According to TBC Capital, the 8.375 percent interest rate makes Silknet’s new Eurobonds competitive at the regional level.

The international rating company Moody’s has changed its negative rating outlook for Silknet to stable, based on the company’s improved performance and liquidity.

According to the Fitch rating agency, the credit rating of the new bond is likely to be “B”.

“The company plans to use the proceeds from the debt issuance to refinance its current $200 million Eurobond due in 2024 and lari-denominated bonds due in 2022, to fund shareholder distributions and for general corporate purposes,” Fitch said in a statement.

“Silknet has the ability to repay some of the new bonds shortly after issuance.”

Silknet is the second-largest telecommunications company in the country and is part of the investment group Silk Road Group. As of September 2021, the company serves 1.72 million mobile and 197,000 fixed subscribers in Georgia. The company’s internet service is used by 293,000 subscribers, while 226,000 subscribers use the TV service. The company received $306.4 million in revenue for the first nine months of 2021. Silknet is rated B1/Stable by Moody’s and B/Stable by Fitch Ratings.

Its acquisition of Geocell, the second-largest mobile operator in Georgia, in 2018 has turned Silknet into a diversified telecom services provider and more than doubled its revenue and EBITDA.

“However, the company’s small absolute size remains a strategic weakness. We expect the company’s Fitch-defined EBITDA to be about $61 million in 2021,” Fitch said.