UAE's GEMS Education Refinances $818m Loan At Better Terms

GEMS Wellington Academy Al-Khail

GEMS Education, a Dubai-based schools operator, has completed a AED3 billion ($816.8 million) loan which refinances an existing facility with improved terms, its chief financial officer said on Sunday.

The firm, which operates more than 50 schools across 19 countries in the Middle East, North America, Europe, Asia and Africa, joins a number of corp-orates in the United Arab Emirates using plentiful liquidity in the local banking system to enhance borrowing terms - although bankers have recently warned this phenomenon could soon end.

Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD, First Gulf Bank, Mashreq, National Bank of Fujairah, and Noor Bank provided the seven-year loan in which around two-thirds of the cash is structured as shariah-compliant financing, Nick Guest told Reuters.

"Our view is we are a strong and stable credit, even in this period of oil price volatility, so we are taking advantage of market conditions and the liquidity available to us to improve the terms of the loan," he said.

It is the second time the loan, originally taken out in 2013, has been amended with better terms, he said. Having originally raised 2 billion dirhams in April 2013, this was bumped up to 3 billion dirhams last year.

Guest would not be drawn on the pricing of the loan.

However, two banking sources familiar with the matter said the margin was between 3 percent and 3.5 percent depending on different clauses being activated, such as how much of the loan is used.

In February, GEMS' executive director told Reuters that it was looking at opportunities to expand in 2015 in new markets including Indonesia, Vietnam, the Philippines and China.

Last year, private equity investors Fajr Capital, Blackstone and Bahrain sovereign fund Mumtalakat acquired a "significant minority stake" in GEMS Education's emerging markets business.

Under the transaction, GEMS will be split into two entities, with the investing group buying a stake in the part of the business focused on the Middle East, north Africa and Asia. The other sector will hold GEMS' assets in Europe and north America.