Sinotel Technologies, the provider of wireless telecommunications infrastructure and solutions in China, says the group has obtained the approval of the Shenzhen Development Bank to provide credit financing of up to RMB40 million ($8.23 million) to fund the group’s ongoing working capital needs.

Together with the existing facility provided by DBS and Hong Kong and Shanghai banks, the the group has lined up credit facilities worth a total of RMB130 million, giving it additional source of working capital to fund its ongoing projects. Should all the facilities be fully drawn down as at Sept 30 2009, the group will have a debt to equity ratio equivalent to 0.23 times.

All three credit facilities will provide flexibility to Sinotel in managing its working capital as they are revolving in nature, i.e. interest is only chargeable on the amount drawn.

Under the agreement which is similar to the two existing credit lines with the DBS Bank and HSBC, Sinotel says it has to present actual contracts secured from the mobile operators to the bank before being allowed to draw down on the facility.

This is somewhat similar to a factoring loan with the exception of a cap on the facility granted.

Subsequently, payments received from the mobile operators would have to be channelled through the group’s account maintained with the bank.