IHS Holding Enters into $600mn 3-Year Bullet Term Loan

IHS Holding Enters into $600mn 3-Year Bullet Term Loan

IHS Holding Limited, one of the largest independent owners, operators, and developers of shared communications infrastructure in the world by tower count entered into a new $600 million three-year bullet-term loan, of which $370 million is expected to be drawn down.

According to a statement released by the company, the terms of the loan carry an interest rate of 3.75% plus a three-month term secured overnight financing rate (SOFR) and CAS.

The company said the majority of the proceeds from this initial utilization are expected to be used to repay the $280 million bridge facility that is due to mature in February 2023.

This also includes the $76 million US dollar tranche of IHS Towers’ Nigerian credit facility that is amortizing and due to mature in September 2024.

The remaining proceeds will initially be left undrawn and can be used for general corporate purposes, according to the statement, noting that the financing is currently leverage neutral to IHS Towers.

Absa, Citi, Rand Merchant Bank and Standard Chartered Bank are the Bookrunner initial mandated lead arrangers of this transaction, the company said.

In September 2022, IHS Towers also successfully extended the termination date of its $270 million revolving credit facility, for a period of two years after its original termination date, to March 30, 2025.

The commitments available under this facility currently remain undrawn, according to the company.

Recently, Moody’s Investors Service downgraded the ratings of three non-financial corporates that are domiciled in, or have substantial exposure to Nigeria and placed all ratings on review for downgrade – including IHS Tower.

The rating actions follow the weakening of the Nigerian government’s credit profile.

“For IHS, the downgrade also reflects exposure to currency convertibility risk, which over time will weaken the company’s liquidity position if it is unable for a prolonged period of time, to upstream cash flow generated in Nigeria to the group level”, Moody’s said.

The rating note stated that IHS earns around 67% of its earnings before interest tax depreciation and amortization (EBITDA) from Nigeria, which is denominated in naira.

It said IHS’ contracts are either dollar-linked or have naira consumer price index pricing escalators that allow the company to pass through most of the cost inflation or currency depreciation it is exposed to.

Moody’s said nevertheless, the fact that revenues are invoiced in naira exposes the company to dollar shortages in the country and the resulting convertibility risk. IHS serves its dollar bonds through cash upstreamed to the group by its international operations, the largest one of which are in Nigeria.

The rating note explained that during the six months to June 2022, IHS upstreamed $147 million of cash from Nigeria, in addition to regular upstreams from other operating companies.

Liquidity remains good and is supported by a cash balance of around $500 million outside of Nigeria. This includes a $270 million fully available liquidity facility, which Moody’s expects will provide the company with adequate cash for the next 2-3 years even in case it was unable to upstream any cash flow from Nigeria over this timeframe. # IHS Holding Enters into $600mn 3-Year Bullet Term Loan

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