The Kenyan Treasury is to raise its stake in Telkom Kenya from 30% to 40%, as private equity firm Helios Investment Partners prepares to buy a 70% stake in the incumbent from Orange. A deal could reportedly be agreed in the coming week.
The Kenyan Treasury is to raise its stake in Telkom Kenya from 30% to 40%, as private equity firm Helios Investment Partners prepares to buy a 70% stake in the incumbent from Orange (EPA:ORA). A deal could reportedly be agreed in the coming week.
According to a report in local newspaper Business Daily, the government would not pay for the additional stake, but “is being paid in kind for not exercising its pre-emptive rights as contained in the shareholder agreement.”
The writer of the article appeared sceptical as to whether Helios would succeed “where a transnational telecommunications conglomerate has failed,” noting that the buyer would acquire a company that is “deeply in debt and more or less insolvent.”
It said that the deal price, undisclosed by the parties, included shareholder loans worth some US$225m, adding that the company had posted FY 2015 operating losses of Sh4.3bn (US$42m), with this figure expected to rise to Sh10bn (US$97m) for FY 2015.
The Treasury is reportedly asking for the sale agreement to include clauses exempting it from “any obligation to provide loans, equity injections or other funding to the company”, while asking Orange to provide some US$90m to support the company during 2016. In February 2015, Orange said it had “lost control” over the subsidiary. Months before, Vietnam’s Viettel had pulled out of a bidding process because it failed to gain certain assurances from the government.
Orange declined comment on the report, while a spokesperson for Helios was not immediately available for comment. The Kenyan government could not be reached.