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Vimpelcom sells Algeria firm stake [Gulf Daily News (Bahrain)](Gulf Daily News (Bahrain) Via Acquire Media NewsEdge) MOSCOW: Russia's Vimpelcom has resolved a long-running dispute with the Algerian government by selling it a majority stake in the country's biggest telecoms operator for $2.6 billion, while it will keep control and slash debt. Orascom Telecom Algeria, also known as Djezzy, is a prized asset, which Vimpelcom bought in 2010 from Egyptian tycoon Naguib Sawiris as part of a more than $6bn deal as it aimed to diversify outside of Russia. Algeria that year made moves to nationalise Djezzy, hitting the business with back tax claims and restrictions on imports and foreign exchange transactions, creating uncertainty that has weighed on Vimpelcom's shares. Yesterday, Russia's third-largest mobile operator said that Global Telecom Holding (GTH), its 51.9 per cent-owned subsidiary, had signed an agreement to sell a 51pc stake in Djezzy to the Algerian National Investment Fund (FNI) for $2.6bn. The deal will help Vimpelcom reduce its $27.5bn of gross debt, built up in an acquisition spree, by $4bn. "It's a great day for the company. It has been a three-year journey, and now it has come to an end," Vimpelcom chief executive Jo Lunder said. "It is possible for us to take advantage of the very attractive telecom market in Algeria and continue to develop Djezzy, which has been difficult for us all these years," he said. GTH will keep a 45.6pc stake and buy the remaining 3.4pc of Djezzy shares from minority shareholder Cevital for $178 million, Vimpelcom said. Despite ending up with less than 51pc, GTH will continue to exercise operational control over Djezzy, based on a shareholder agreement with the fund. Djezzy will pay Algeria a $1.3bn fine, however, to lift foreign exchange and import restrictions. It will also write off tax receivables worth $700m, implying a total write-off by Vimpelcom of $2bn in its 2013 financial report. Alexander Vengranovich, an analyst at Otkritie Capital in Moscow, said the terms of the settlement were favourable for Vimpelcom as he upgraded his target price to $11.30 from $11. Vimpelcom also has an option to sell its stake in Djezzy to FNI on the seventh anniversary of the closing of the deal. GTH will receive $1.86bn in dividends from Djezzy prior to the closing of the transaction and will pass on these funds and the proceeds from the Djezzy stake sale to Vimpelcom by repaying it an outstanding loan. Otkritie's Vengranovich said that using the proceeds to deleverage meant that Vimpelcom would be able to resume dividend payments that would be closer to normal after it slashed payouts in January to preserve cash for debt repayments. Vimpelcom's biggest shareholders are Russian billionaire Mikhail Fridman's Alfa Group and Norwegian telecoms group Telenor. (c) 2014 Al Hilal Publishing & Marketing Group Provided by Syndigate.info, an Albawaba.com company |