LONDON: Naguib Sawiris, the Egyptian tycoon trying to sell assets to Russian group Vimpelcom, is to lose control of Greek telecom business Wind Hellas after creditors emerged as the preferred bidders on Monday.
Bondholders will take over Wind Hellas in a debt-for-equity swap, a blow for Sawiris who retained control of the group in a first restructuring last year.
But he failed to gain the support of creditors after the group was hit once again this year by the turmoil in the Greek economy and an industry price war, despite tabling an offer for the company alongside five other bidders.
Senior secured bondholders — who were owed more than €1.2 billion — will inject €420 million into the company in return for control of the group, parent company Weather Finance III said.
The sale of Wind Hellas will further shrink the empire of the Egyptian billionaire, still trying to sell his holdings in Wind and Orascom to Vimpelcom for $6.6 billion.
The Vimpelcom transaction is complicated by uncertainty over Orascom’s Algerian unit Djezzy, the company’s biggest revenue earner which Algiers has said it wants to nationalize following a row over back taxes.
"The Timing was wrong for Naguib. He would have been a more credible bidder for Wind Hellas if he had cash in hand from the Vimpelcom deal," a person familiar with the matter said.
Russian president Dmitry Medvedev failed to get a public pledge from Algeria earlier this month that Djezzy would be part of the proposed deal between Vimpelcom and Sawiris.
Algeria has since started interviewing potential advisers to help nationalize the contested unit. .
Sawiris could not immediately be reached for comment.
As part of the takeover, lenders to a €250 million revolving credit facility are set to be paid with the cash injection, while senior secured bondholders will write off their claims in exchange for 100 percent of the equity in Wind Hellas.
Senior unsecured bondholders — at the bottom of the creditor hierarchy and who are owed €355 million — will also have to write off their loans as part of the deal.
The firm will change hands in a pre-packaged administration, two sources close to the matter said. This is a pre-agreed sale mechanism via which a company can be sold on, minus some debt.
It mirrors the process used by Sawiris last year when Wind Hellas’s sale became the UK’s biggest pre-pack and a €1.1 billion layer of debt was cut out.
That deal, possible because Wind Hellas’s parent company at the time had an office in London, resulted in out-of-pocket lenders blasting the UK as a "bankruptcy brothel".
This time, more than 75 percent of senior secured bondholders supported the bid put forward by a noteholder committee controlling big chunks of the debt, clearing the approval threshold.
Six specialist distressed debt investors — Mount Kellett Capital Partners, Taconic Capital Advisers, Providence Equity Capital Markets, Anchorage Capital Group, Angelo Gordon and Eton Park International — made up the committee and have underwritten the bondholder offer and new money.
Weather said on Monday that new board members — senior telecom executives and members of the Greek business community — would be appointed at Wind Hellas, while Nassos Zarkalis would continue as chief executive.
Norwegian telecom Telenor was also one of the six bidders and had made an offer with a cash component, sources told Reuters last week. The remaining bidders included two Greek peers and US private equity firm Saban Capital.
