Egypt-based Orascom Telecom Holding (OTH) is to hold a vote on its proposed refinancing, capital increase and demerger, the company has announced.
OTH, which is 51% controlled by another Naguib Sawiris vehicle, Wind Telecom, said it would hold an…
Egypt-based Orascom Telecom Holding (OTH) is to hold a vote on its proposed refinancing, capital increase and demerger, the company has announced.
OTH, which is 51% controlled by another Naguib Sawiris vehicle, Wind Telecom, said it would hold an ordinary general meeting and extraordinary general meeting on 14 April.
Resolutions relating to the merger with Russia’s Vimpelcom will include plans to refinance some US$2.7bn in secured and high yield debt as well as derivatives; a capital increase from the current E£7.5bn to E£14bn (US$1.26bn-US$2.35bn) (though issued and paid-in capital will remain unchanged); and a demerger from OTH of Orascom Telecom Media and Technology Holding S.A.E. (OTMT), which will become an independent company.
OTMT will comprise assets not part of the Vimpelcom deal, including Egyptian Company for Mobile Services (ECMS), CHEO Technology Joint Venture (Koryolink) in North Korea, Orascom Telecom Ventures S.A.E. (formerly known as InTouch Communication Services S.A.E., as well as other technology and media investments such as undersea cables.
The refi would be a related party transaction with Vimpelcom, which would provide the funding to refinance Wind Telecom’s outstanding secured and high yield debt. The combination triggers the refinancing of Wind’s senior secured credit facility and equity linked notes. Furthermore, the refinancing of the high yield notes will enable the demerger to take place, since they will be subject to more favourable terms.
The company promised that following the capital increase, “Any future issuances relating to the portion of the Company’s authorized share capital being increased pursuant to this resolution will only be undertaken in order to repay debt, will offer customary preemptive rights to all shareholders, and will be issued at fair market value rather than par value”.
Offering further details on the demerger, Orascom said that existing OTH shareholders would hold the same percentage interest in OTMT on the date of the demerger.
Once the demerger and tie-up with Vimpelom are complete, Wind’s own 51.7% indirect stake in OTMT will be transferred to Weather Investments II S.ar.l. (Weather II), the current main shareholder of Wind Telecom, as part of the consideration for the VimpelCom-Wind transaction.
Weather II has asked OTH that OTMT subsequently launch a voluntary tender offer to buy back all of OTMT’s issued shares at fair market value.
An Egypt-registered independent financial advisor will be mandated to give a fairness opinion on the cash or other consideration offered to OTMT shareholders.
Representatives for Orascom were not available for further comment by press time.
