Tuesday, April 14, 2009

Egypt's OT: France Tel has 3 days for Mobinil deal

By TAREK EL-TABLAWY , 04.13.09

The chairman of Orascom Telecom said Monday he has extended for 72 hours the deadline for France Telecom to complete its purchase of Mobinil, the Arab world's largest mobile phone provider by subscribers, or the deal is over.

An international arbitration court had ruled in March that Orascom must transfer to France Telecom its 28.75 percent stake in Mobinil Telecom, a holding company in which FT owns an 71.25 percent stake.

Mobinil Telecom, itself, holds a 51 percent interest in the Egyptian Company for Mobile Services, Mobinil's operator in Egypt.

The deal, however, has hit repeated obstacles as OT and FT argue over whether the Paris-based telecom giant is required to extend a 100 percent mandatory tender offer for all of ECMS and if that tender should be at the share price stipulated to by the Arbitration Court of the International Chamber of Commerce's ruling. FT had proposed two different prices.

In a press conference Monday, Naguib Sawiris criticized what he described as "childish" behavior by some officials within France Telecom in tackling a shareholder dispute Orascom had filed with the arbitration court in 2007.

"I didn't want to do this," Sawiris said, referring to the deadline extension. "I was coming today ... to tell you that they did not comply and the ruling is over."

"But we said we would follow legal advice and provide proof of good faith for the last time," Sawiris said. After the April 15 deadline, he would "consider that the arbitration court ruling is over and is no longer binding on us."

Orascom said that should FT not comply with its requirements, and the deal is scuttled, then the company would retain its rights for potential legal action or fines. The arbitration ruling said that Orascom would be subjected to a $50,000 per day fine past the April 10 share transfer deadline - a timeframe with which Sawiris said his company had complied.

France Telecom on Monday renewed its call for Orascom to comply with the arbitration ruling, saying that once that step had been taken, FT "hopes to restart its dialogue with Egyptian market authorities in order to put into place a fair offer for ECMS' minority shareholders, notably its individual shareholders."

Egypt's CMA on April 7 sided with Orascom's interpretation that FT must submit a mandatory tender offer for all of ECMS's shares, which included a 20 percent direct equity stake held by the Cairo-based firm and the remaining 29 percent free floating shares. At a proposed share price of almost 274 Egyptian pounds ($49), the deal was valued at $1.7 billion. FT had disputed the interpretation which it said left it "not obliged by law or by market practice to launch a mandatory buyout offer."

France Telecom had initially said the deal was valued at about euro530 million ($717 million) based on a per share price of 441.66 Egyptian pounds ($78.53). That valuation was based on the shares in Mobinil Telecom. FT also maintained the tender for all the shares was voluntary.

Sawiris disputed what he said were claims by FT that Orascom had failed to meet the deadline for transferring its minority stake in Mobinil Telecom, saying that France Telecom itself had failed to present payment for the shares, a step which would have triggered their release.

He maintained that FT officials were dragging their heels, not responding to his calls, missed an earlier meeting with Egyptian regulators and had maligned Orascom's reputation in the French media.

"In reality, this behavior - and I don't want to heat matters up - but this is not the behavior of a big company" of such standing, said Sawiris, adding that he remained committed to an amicable solution despite what Orascom said in a statement amounted to "incorrect and libelous" press releases by FT.

FT's statement Monday said the company "hopes Orascom Telecom (would) stop its media campaign so that a calm atmosphere more conducive to discussions with Egyptian authorities may reign."

In anticipation that FT may balk at implementing the full 100 percent tender offer at a price of 274 pounds per share, Sawiris said the company has already prepared a release for April 15. It says that "they have not complied and the ruling, on our part, is over," said Sawiris.

He also ruled out further deadline extensions, saying: "After 5 p.m. on Wednesday, if I get 10,000 (Egyptian) pounds per share, I won't sell."

Sawiris, who has stated he would use the proceeds of the sale to expand Orascom's holdings, said that while he has no desire to sell the company he built from scratch, he was obliged by the Arbitration Court of the International Chamber of Commerce's ruling. If it wasn't for the court decision, "there's no way I would have sold" the company, he said.

Mobinil's shares were down 2.6 percent late Monday, hitting 203.63 pounds.

Orascom Telecom also has operations in Algeria, Pakistan, Bangladesh, Tunisia, Zimbabwe and North Korea.