In addition, Capcom is preparing an additional investment of US$210 million, made up of assets belonging to MultiLinks and MTS. Both former operating companies have assets valued at US$112 million and US$98 million respectively.
Leadership revealed Afreximbank will finance a large chunk of the project by putting up for sale MultiLinks Limited’s fibre cable assets to Suburban FibreCo, a broadband operating company that has several dark fibre cables in Nigeria.
With the sale, the bank will be able to raise enough funds to successfully finance the deal, which on completion will enable Starcomms to launch its LTE network with its 20MHz spectrum.
Following the completion of discussions, all the parties involved are putting together a fully binding sale and purchase agreement with which the assets will be purchased by Suburban FiberCo from Capcom.
It is expected that Suburban FiberCo will make the purchase with a credit facility that will be provided by Afreximbank, as well as equity.
Confirming the deal, Dem Elesho, Chief Executive of Multi-Links and the Chief Executive designate of the new Starcomms, said Capcom’s funding would be a combination of equity, debt and asset sales.
Capcom has already raised US$50 million of equity from some key investors, with the sum deposited into an escrow account prior to the annual general meeting which was held on December 28, 2012, during when Starcomms shareholders approved the acquisition deal.
Capcom intends to revolutionise Starcomms by consolidating the code division multiple accessCDMA market and with the aid of the increased broadband spectrum, Capcom wants to shift the business model of Starcomms to the profitable data segment.
Already, outstanding financial debt has been slashed from 31.9 billion naira (US$205 million) in the first quarter of 2010 to 15.1 billion naira as at the third quarter of 2012.