Telecommunications giant Telekom Malaysia Bhd today signed a RM1.37 billion (US$360) term loan facility to raise funds for the redemption of the company's outstanding euroconvertible bonds prior to maturity, a senior official said.

Mohamad Khir Abdul Rahmad, Telekom Malaysia's chief executive, said the two-year term loan facility would have a floating interest rate based on US dollar Libor.

Telekom inked the deal with four financial groups: HSBC, Standard Chartered Bank, Bank of Tokyo-Mitsubishi and ING.

The euroconvertible bonds were issued in 1994 at a coupon of four percent per year and would mature in October 2004.

Refiancing saves RM30 million

Mohamad Khir said the refinancing enables Telekom to save RM30 million in interest and would improve the company's cashflow and finances.

Telekom would issue the redemption notice and is expected to pay the bondholders and investors in early August, he said.

Mohamad Khir said the telecommunications company also intends to reduce its exposure to foreign currency borrowings.

Telekom currently has a RM760 million (US$200 million) term loan maturing end-June which it intends to repay using internal funds and standby banking facilities, he added. - AFP