August 21, 2014 / 1:25 PM / 3 years ago

UPDATE 2-Djezzy's parent says stake fairly valued ahead of deal vote

(Recasts, adds detail of shareholder meeting, Vimpelcom comment)

By Asma Alsharif

CAIRO, Aug 21 (Reuters) - The parent of telecoms group Djezzy has released a valuation of the Algerian company ahead of a shareholder vote on the sale of a stake to the Algerian government, potentially paving the way to the completion of the over $2 billion deal.

Citing a study it commissioned from financial advisers HC, Djezzy’s parent Global Telecom Holding (GTH) said the stake was worth $2.539 billion, meaning the $2.6 billion price which the Algerian government had agreed to pay would be pitched at 4 percent premium to its estimated fair value.

GTH’s parent, Amsterdam-based Vimpelcom, had agreed the sale to the Algerian government in April, but it remains to be voted on by shareholders including minority owners at a meeting scheduled for Aug. 26.

Vimpelcom said the release of HC’s report was a mandatory disclosure ahead of the meeting. It needs 66.7 pct of the votes of those present to be in favour, which could prove undemanding given Vimpelcom’s 52 percent stake in GTH.

No-one at GTH could immediately be reached for further comment.

“The offered buy price is higher by 4 percent than the fair price,” HC was quoted as saying in the statement, which included a detailed explanation of the methodology behind the valuation.

Via GTH, Vimpelcom had bought Djezzy, or Orascom Telecom Algeria, in 2010 from Egyptian tycoon Naguib Sawiris as part of a more than $6 billion deal as it aimed to diversify outside Russia.

During that same year, Algeria made moves to nationalise Djezzy, hitting the business with back tax claims and restrictions on imports and foreign exchange transactions.

With the sale agreement, Vimpelcom therefore resolves a long-standing ownership dispute with the Algerian government, while keeping its control and slashing debt. The dispute had weighed on Vimpelcom shares, which closed in New York at around $8.6 on Wednesday, well below a peak of around $19 set in 2010.

The statement said the deal should also be positive for Djezzy.

“The continuation of the firm (Djezzy) ... depends largely on the completion of the deal, while the alternative is to continue the dispute with the Algerian government that could harm the value of the company,” the advisers said.

The deal will help Vimpelcom reduce its $27.5 billion of gross debt, built up in an acquisition spree, by $4 billion. GTH will keep a 45.6 percent stake and will buy the remaining 3.4 percent of Djezzy shares from minority shareholder Cevital for $178 million, Vimpelcom said in April. (Additional reporting by Maria Kiselyova in Moscow; Editing by Jason Neely and David Holmes)

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