CAIRO: Egypt s Orascom Telecom is discussing paying 20 percent of a $596.6 million claim by Algeria for back taxes and penalties, a member of the company s board said on Sunday.
Algeria agreed that Orascom can use its funds in Algeria to pay 20 percent and then apply for an objection and start negotiations, board member Alex Shalaby told Reuters after a shareholders meeting.
There is discussion of Orascom making a 20 percent payment to start negotiations on the net of the government s case, he added.
Asked whether OT had agreed to pay the 20 percent, he said: I m not positive, but I believe it is agreed to at least in principle.
OT shareholders on Sunday also agreed to an $800-million rights issue to strengthen its balance sheet. The shareholders approved the increase in a hand vote, a Reuters correspondent present at the meeting said.
Last month Orascom announced that the Algerian tax authority had charged it $596.6 million in back taxes on allegations that it had not kept proper accounts in 2005-2007.
On Thursday, OT said it has obtained a month-long waiver from major lenders that will enable it to go ahead with a $800 million capital increase.
Pressed as to what the waiver – to run until Jan. 26 – would entail, officials from the international phone operator declined to comment.
Chief Executive Officer Khaled Bichara told Reuters in an interview the waiver would not affect the firm s repayment schedule for its $2.5 billion of debt.
The company, which runs mobile phone operations from North Africa to North Korea, said it was seeking a longer-term solution from its majority senior secured lenders to address the Algerian tax claim.
It s a systematic thing. Our plan is the same, we re going to do a capital increase, Khaled Bichara told Reuters. Once the capital increase is done, you will not need the waiver anymore.
Orascom said its parent company Weather Investments had committed to 51 percent of the capital increase and would cover any shortfall.
Weather Investments is the ownership vehicle of billionaire businessman Naguib Sawiris and controls 50.6 percent of Orascom, according to Reuters data.
By obtaining the waiver, the company may have succeeded in preventing immediate financial complications, according to a senior Cairo-based legal consultant familiar with the company but not involved in this case.
From the statement it seems to be a waiver of certain terms and conditions of the lending documents, the consultant said, declining to be named due to the sensitivity of the issue.
The firm s Algerian unit operates a mobile network under the brand name Djezzy which had revenues of $1.8 billion in 2007. -Reuters
