VimpelCom To Sell 51% Stake In Orascom Telecom Algerie For $2.64 Bln - Update

(RTTNews) - Telecommunications services provider VimpelCom Ltd. (VIP) and its unit Global Telecom Holding S.A.E., or GTH, Friday announced that they have signed a share purchase agreement for sale by GTH of a 51 percent interest in Orascom Telecom Algerie SpA to Fonds National d'Investissement for a purchase consideration of $2.643 billion.

Orascom Telecom Algerie, or Djezzy operates a mobile network in Algeria. Fonds National d'Investissement, or FNI, is an Algerian National Investment Fund. Global Telecom Holding SAE, formerly Orascom Telecom Holding SAE, is an Egypt-based company engaged in provision of mobile telecommunications in Africa, Asia and North America.

Djezzy will distribute a dividend of $1.862 billion to GTH immediately prior to the closing of the deal, which is expected to occur by the end of 2014.

The total dividends and proceeds due to GTH at closing are expected to total $4.0 billion, net of all taxes and after the settlement of all outstanding disputes between the parties and payment of associated fines.

All proceeds from the transaction will be used to pay down the outstanding shareholder loans provided by VimpelCom to GTH.

Global Telecom Holding has suspended its current arbitration against the Algerian State initiated on April 12, 2012 and, upon closing, the parties to the arbitration will settle the arbitration.

The foreign exchange and import restrictions put in place by the Bank of Algeria against OTA on April 15, 2010 will be lifted on closing, following the payment by OTA to the Algerian Treasury a fine of 99 billion Algerian dinars, equivalent to about $1.3 billion.

As a result of the settlement of the disputes, both Global Telecom Holding and VimpelCom will take a one-off charge of $2.0 billion in their 2013 financial statements. Upon closing, GTH and FNI will enter into a shareholders agreement, which will govern their relationship as shareholders in OTA going forward.

Jo Lunder, chief executive officer of VimpelCom said, "This favorable long-term agreement and settlement represents a successful outcome for all stakeholders. For VimpelCom and GTH, this value accretive transaction releases USD 4.0 billion in cash proceeds to pay down gross debt."

The terms of the Share Purchase Agreement and the Shareholders Agreement have been approved by the Algerian Conseil des Participations de l'Etat, the Conseil de Direction of the FNI, the VimpelCom Supervisory Board and the Global Telecom Holding Board of Directors.

Prior to closing and in order to facilitate the closing OTA will contribute its operations to Optimum Telecom Algerie S.p.A, a unit of OTA.

Optimum also intends to establish a credit facility with a syndicate of local banks in an amount of up to 82 billion dinars, or about $1.0 billion.

VIP closed Thursday's regular trading at $9.00, up 8.56 percent.