10:58 GMT 6th January 2011
In the letter to Algerian prime minister Ahmed Ouyahia and three other senior officials, Orascom chair Naguib Sawiris said he was making his last request to the Algerian government to stop pressuring Djezzy. He said the unit could not continue doing business unless there was an immediate resolution to the row – which centres around tax claims and allegations of currency violations. He said Orascom had already incurred billions of dollars in losses.
Orascom Telecom has reluctantly agreed to negotiations with the Algerian government, which says it wants to nationalise Djezzy. But Sawiris said it was increasingly unlikely Algeria would pay a fair price – something he said he would not accept. ‘We are concerned that we will be left with no choice but to seek redress through international arbitration proceedings,’ said the letter, dated November 2.
Banking sources said that the Algerian government had said privately it would pay around $2.5bn for Djezzy, while Sawiris has made public reference to a previous $7.8bn offer for Djezzy from South Africa’s MTN. ‘There is a real risk that this deal fails. The Norwegians (Telenor) were dragged into it and I think they are looking for reasons not to support it,’ said a London banker, who advises telecom companies.
‘At the same time, the Algerian government has been procrastinating over appointing advisers for talks over Djezzy. Naguib is being squeezed on both sides.’
Telenor, which owns 36 per cent of Vimpelcom has repeatedly aired doubts over a deal with Orascom. Late October, it asked for clarification of the merger parameters before Vimpelcom’s board makes a final decision on the transaction. Analysts say Sawiris may consider selling off Orascom’s assets piecemeal if a favourable resolution cannot be found.
‘The clock would start ticking in a year and a half to two years when lots of (Sawiris) debt comes due in 2013,’ said CI capital analyst Amr Elalfy. Italian mobile company Wind, also part of the proposed Vimpelcom deal, is launching €3.4bn in loans to refinance existing debt.
Algerian officials have said that all back-tax claims and other demands against Djezzy have been in accordance with the law, and that Algerian legislation gives it the right to nationalise the unit.
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