Lukoil close to $1.2bn deal as MTS nears completion

Russian oil group Lukoil is understood to be very close finally to signing lenders into a $1.2bn facility, after discussions on the deal began at least four months ago.

The transaction, which, according to one official, will be joined by 10 to 12 banks as mandated lead arrangers, will be the single biggest loan raised for a Russian borrower this year. It will also be only the second deal after a loan extension for Mobile Telesystems (MTS) to get done among a syndicate of banks in 2008.

The only other facilities Russian borrowers have been able to obtain have been bilateral loans.

Other bankers close to the Lukoil deal would not confirm the number of lenders, whether it was a pure club loan or the final amount but lenders are known to have been going through the process of getting credit approval in the last month.

Lukoil is understood to be paying 400bp over Libor on its deal, after fraught negotiations over pricing. The oil group initially set out to raise between $1bn and $1.5bn.

Meanwhile, general syndication of the extension loan for MTS is in its final stages, bankers close to the deal said. The loan, which was launched in early June and totalled about $580m-equivalent after a senior phase of syndication, has received firm commitments and is likely to be increased.

MTS originally set out to extend $630m of a $1.33bn loan. It already raised $295m and Eu214m, bringing it already close to its $630m target, and the deal attracted existing and new lenders. Credit Suisse and ING are leading the financing, and all other the banks that signed into the senior level of the transaction were mandated lead arrangers.

The margin on the loan is 650bp over Libor. Lead arranger tickets of $25m pay 225bp over Libor. Banks are also being offered $15m arranger tickets for 200bp and $10m manager tickets for 175bp. The all-in for the top ticket on offer is 875bp. Banks can commit for equivalent amounts in euros as well as dollars.