The European Bank for Reconstruction and Development (EBRD lead arranged the transaction and financed a $180 million slice of the debt through an A loan split three ways: $110 million put up by the EBRD and two parallel loans of $35 million each put up by Export Development Canada (EDC) and NIB.

The $120 million B loan was jointly underwritten by ABN Amro, BankAustria Creditanstalt, Citibank, Raiffeisen Zentralbank Oesterrich, Nordea, International Finance Participation Trust and Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden.

The deal is backed with confidence because of MobiFon's strong sponsors and excellent track record since its inception in March1997.

The transaction has two purposes ? to allow MobiFon to consolidate existing debt and fund continued growth. Despite Romania's weak B+ foreign currency rating, lenders' confidence stems from MobiFon's two million subscribers. The company has 64% of the mobile market in Romania and covers 95% of the country's population.

MobiFon is 63.5% owned by Clearwave, a subsidiary of Canada's TIW, 20.1% owned by Vodafone and the rest comes from the private equity funds of Rom GSM, led by JP Morgan Private Equity Partners and Barings. Shareholders have been in from the founding of MobiFon, which provides a solid and stable outlook.

Clearwave also has a stake in Cesky Mobil, a second, smaller, mobile operator in the Czech Republic, with a voting interest of 50.1% and an economic interest of 23%. Although TIW is primarily Canadian, its European headquarters is in Prague.

The deal refinances a $200 million loan signed back in January 1999, also involving the EBRD and ABN Amro. Second time around the pricing was slightly more expensive given current market conditions which have made it harder to syndicate a telecoms loan.

Repayment will kick in after a grace period until January 2004. The amortization schedule begins thereafter with quarterly payments by MobiFon.

No insurance was taken out on this deal. According to Andre Savalov, EBRD: ?The market doesn't see the need to cover political or commercial risk in this transaction. Banks in the syndicate have been lenders since 1997. We are extremely comfortable lending into this.?

The latest financing has less stringent terms because Mobifon's ability to upstream internally generated revenues to shareholders has improved since the start-up funding.

MobiFon's success has been fuelled by the relative lack of competitors for Romanian market share and the fact that more people use mobile phones than fixed lines.

The only potential shadow on MobiFon's immediate horizon is Orange Romania, owned by France Telecom. Orange arguably already has a foothold in the market although penetration is still quite small. Orange is expected to make a bid for market share in the coming year.

A further potential competitor is Mobil Rom. However, Mobil Rom uses a different technology to MobiFon, known as biologue GSM, and has yet to show signs of making a real impact on MobiFon market share.

Seven years for a loan in the Romanian market is ?fairly standard? according to bankers. However, the deal constitutes a vote of confidence in both the Romanian mobile market and MobiFon's ability to deliver.

Deal flow in Romania has been on the increase steadily since the 1990s reforms. Another recent deal to be completed was for border surveillance equipment to help tighten security at and control of the country's borders. The ECGD came in to act as lead insurer for the equipment, supplied by BAE Systems.

The EBRD is bullish about this latest transaction. The bank has a longstanding relationship with Romania and is the largest single investor there. MobiFon is the third financing that EBRD has taken on in the country: the first was the original start up financing of MobiFon in the late 90s and the second was a deal with Petron, the Romanian oil company. EBRD has also approved several public sector deals in the last couple of years. These include an Eu142 million senior debt facility to Rom Telecom and the SNCFR railway restructuring transaction which carried Eu85.6 million in debt.