Legal action last resort, says Orascom
Cairo, November 19, 2010
Egypt's mobile phone company Orascom Telecom said it still hoped to resolve a dispute with the Algerian government over its Djezzy unit although it did not rule out arbitration as a last resort.
'There is an international tender to choose advisers on November 24,' Chief Executive Khaled Bichara told the Morgan Stanley annual TMT conference in Barcelona on Thursday.
Algeria began recruiting advisers last month to help value local mobile firm Djezzy, which it wants to nationalise and which is Orascom Telecom's biggest revenue earner.
Orascom is currently in talks to sell assets to Russian group VimpelCom, a deal that would create the world's fifth biggest mobile phone operator.
Bichara said should Orascom not hear from the Algerian government or get a price for Djezzy it did not consider fair it could be in arbritration by the second quarter next year.
'We would only go to arbitration as a last resort,' Bichara said, adding that international arbitration could take two to four years.
Bichara also said the deal with VimpelCom did not hinge on whether or not Djezzy was part of the package and that the company may sell some assets independent of the outcome of its negotiations with VimpelCom.
'We got (VimpelCom) management understanding what the risks for Algeria are...we asked if there is a problem with Algeria would we continue and VimpelCom's (Alexander) Izosimov said yes,' Bichara said.
But analysts have said uncertainty over Djezzy could scupper the deal. Algerian industry and government sources have said they believe a price for Djezzy of between $2 billion and $3 billion would be fair.
VimpelCom's CEO has said he expected Djezzy to be worth seven times its earnings before interest, taxation, depreciation and amortisation (EBITDA) -- which would value the unit at about $7 billion.
VimpelCom's board is expected to decide on the deal at a board meeting to take place by the end of this month or mid-December.
VimpelCom said in October it had engaged UBS Investment Bank and Deutsche Bank AG to act as its financial advisors and Akin Gump Strauss Hauer & Feld LLP to act as its legal adviser.
Citigroup Global Markets Limited acted as financial adviser and provided a fairness opinion to the Supervisory Board of VimpelCom.
Orascom chairman Nguib Sawiris' Weather Investment has engaged Lazard, EFG-Hermes and Credit Suisse to act as its financial advisors and Cleary Gottlieb Steen & Hamilton to act as its legal adviser.-Reuters