London, Dec. 7 (Bloomberg) -- MobilCom AG's banks are finding it difficult to convince other banks to share the risk of a 5 billion-euro loan to Europe's fourth-biggest mobile phone company.
``In summer, when we went to the banks the main problem was turning banks away,'' said Thorsten Grenz, the chief financial officer of MobilCom. ``Today it would be difficult to get'' financing.
MobilCom shares fell about 30 percent over the last two days after a German newsletter, Prior Boerse, drew parallels to EM.TV & Merchandising AG, a children's television licensing company whose shares collapsed amid mounting debt, missed earnings targets and profit revisions. Today the Financial Times, citing unnamed sources, said the company was having trouble securing bank loans.
Concern about the more than $200 billion companies are investing in faster wireless services has pushed the Bloomberg European Telecommunication Services Index down about 50 percent from its March 6 peak. Mobilcom shares fell 7.35 euros to 34.15 today, down from 49 euros at the close of trading two days ago.
MobilCom, partly owned by France Telecom SA, borrowed the money to help pay about $7.5 billion to the German government for a new mobile-phone license. France Telecom also contributed about 7.4 billion deutsche marks ($3.3 billion) in cash. Grenz said MobilCom has collected the loan and paid the government.
Merrill Lynch & Co., Deutsche Bank AG, Societe Generale and ABN Amro Holding NV were the lead managers of the loan. In turn they convinced at least six other banks to share their risk. Those banks included BNP Paribas, Chase Manhattan, ING Bank, Dresdner Bank, Sumitomo Bank and Westdeutsche Landesbank Girozetrale, according to Deutsche Bank.
Helping with Syndication
Granz said this group of ten banks are having trouble finding others to share the risk.
Charles Wickham, managing director, European leveraged finance at Merrill Lynch, said on the other hand that Merrill knows of seven more banks that have committed to sharing the loan. He wouldn't name the banks.
``We're helping in the syndication -- we've made presentations to about 30 banks,'' Grenz said. He said MobilCom will post positive earnings before interest, taxes, depreciation and amortization in 2005 and make a net profit in 2007.
``The syndication is at a relatively early stage still and we expect further commitments from banks at the co-arranger and general syndication phases, which are not due to be completed until well into January,'' said ABN Amro spokesman Martin Winn.
``It's normal that a consortium will try and include further banks,'' said WestLB spokesman Michael Wilde. ``The syndication isn't depending on the share price of the company.'' He declined to comment on whether they're having difficulties.
Spokesman at Societe Generale, Merrill Lynch and Deutsche Bank declined to comment.
``Everyone knows telcos have problems and a lot of the bad news in the price,'' said James Clunie, a fund manager at Murray Johnstone who helps manage about $1.5 billion in stocks. ``It's the banks which are high in stock price and if the stress moves on, we may see them'' decline.
MobilCom said it will have to pay back the bulk, or about 3.7 billion euros, of its loan by 2002.
France Telecom bought a 28.5 percent stake in MobilCom in March for 3.74 billion euros, with an option to increase it in 2003. Gerhard Schmid, MobilCom's founder and chief executive, held 42 percent of the company as of Nov. 30.
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