Mergers, Acquisitions and Financial Results

Orascom Telecom Holding (OTH) has announced the closing of €545 million in debt and equity financing by its mobile services subsidiary in Algeria, Orascom Telecom Algeria. A portion of the proceeds was applied to the $368.5 million final payment for the GSM license awarded in July 2001.

The €435 million in debt facilities, the €104 million in new equity and €26 million in convertible shareholder loan completes the permanent capital structure of OTA, stated a press release. Beyond the payment of the GSM license, the financing will fully fund the expansion of OTA’s network until end of 2004.

The debt financing arranged by France’s Credit Lyonnais and Germany’s West LB represents a landmark in international structured financings for Algeria. The six year tenor facilities include two export credit tranches of €282 million covered by COFACE and HERMES, a structured financing tranche of €135.8 million, and a mezzanine tranche of €17.5 million.

In addition to the arrangers, the financing includes facilities from France’s Proparco, the UK’s CDC Capital Partners, Germany’s Deutsche Investitions und Entwicklungsgesellschaft and represents the first infrastructure financing in Algeria by these institutions. Citibank Algeria acted as a local advisor and agent.

The equity funding is comprised of a capital increase of $104 million and €26 million in a convertible shareholder loan. Pro forma for the conversion of the shareholder loans, OTH will hold a total direct and indirect 60 percent controlling ownership stake in OTA. The equity transaction includes the largest ever foreign direct investment by a US-backed investor in Algeria outside the oil and gas sector.

Orascom Telecom Algeria, operating under the brand name DJEZZY commenced commercial operations in 2002. The company has already more than 1.2 million subscribers representing over 88 percent of the country’s mobile market and a network coverage area serving over 70 percent of Algeria’s roughly 31.8 million inhabitants. — (