Gateway raises cash to expand

Voice and data connectivity provider Gateway Communications' parent company, Gateway Telecommunications, has raised $100 million through bonds.

The transaction, which is the first European issue for a pan-African issuer, is a confirmation of growing international investment interest in the African continent, says the company.

Gateway hopes the transaction will enable it to follow its expansion strategy into new African markets. It also aims to develop next-generation technology and services to "provide even greater levels of connectivity across the continent", it says in a statement.

Julian McIntyre, president and chief treasurer of Gateway Communications, says the company's strong growth performance and cash conversion would aid in growing the company.

While the founders of Gateway have also increased their shareholding in the company to a majority position, the local entity remains more than 30% black empowered.

CEO Peter Gbedemah adds the company is at an "exciting" stage in its growth cycle. "We have developed excellent customer relationships with virtually all major African mobile and fixed-line players. We provide direct connections to 85 million subscribers in 28 countries.

"Completing this transaction allows us to invest further in meeting the expanding requirements of our customers and offer enhanced connectivity across the continent."

Gateway provides connectivity services to telecommunications operators, particularly mobile, into and out of 28 African countries. It also provides national connectivity; connecting mobile subscribers within the same country where there is limited backbone telecommunications infrastructure.

In the last 12 months ended 30 June 2006, Gateway generated $131.4 million in revenue and $18.7 million in earnings before interest, taxes, depreciation and amortisation.

The issue, by Gateway Telecommunications - the parent company - is for $100 million senior secured notes that mature in 2013 with a coupon of 9.875%.