Huawei agrees $1.5 billion loan for strategic expansion

Chinese equipment maker Huawei has taken out a $1.5 billion loan it says will be used for strategic expansion, particularly in Europe.

The loan is repayable over five years and includes a $750 million ‘equivalent term loan’ plus a $750 million ‘equivalent revolving credit facility’, with the facility available in both US dollars and euros but the euro tranche capped at €300 million.

Chinese equipment maker Huawei has taken out a $1.5 billion loan it says will be used for strategic expansion, particularly in Europe.

The loan is repayable over five years and includes a $750 million ‘equivalent term loan’ plus a $750 million ‘equivalent revolving credit facility’, with the facility available in both US dollars and euros but the euro tranche capped at €300 million.

In a statement, the company said it marked the first time that Huawei (Shenzhen, China) had raised a dual currency syndicated facility “in line with its significantly growing global presence and, in particular, its strategic expansion plan in Europe”.

“Huawei continuously strives to create diverse financing channels to maintain our financial flexibility, and this facility will boost our efforts to accelerate business development and build on our global presence so that we can continue to create value for our customers around the world,” said Cathy Meng, Huawei’s chief financial officer.

“This is the largest amount of overseas loan and credit facilities Huawei has raised to date,” said Meng. “We are pleased by the strong received from leading international banks as this highlights the trust and confidence that the financial community has in Huawei’s sustainable growth and globalization strategy.”

Last month, Huawei said its revenues over the first half of the year had grown to RMB113.8 billion ($18.6 billion), a 10.8% increase on sales in the first half of 2012, and forecast a net profit margin of between 7% and 8% for the full year.

The company has continued to flourish while some of its longer-established rivals suffer in the economic downturn, although its total borrowings had mushroomed from RMB13 billion in 2010 to RMB20.8 billion at the end of 2012.

Along with ZTE (Shenzhen, China), Huawei has also been affected by developments in the large US market, where authorities have claimed the company’s equipment is being used for spying purposes by China’s government.

Huawei maintains strong links with the Chinese state but has vigorously refuted the accusations, which have led to a slump in revenues from the US market.