Orascom chairman sees spin-off by year-end

Reuters, Thursday 13 Oct 2011

Under $6 billion deal with Russian giant, some assets will be merged into a new firm under the control of Orascom founder Naguib Sawiris

Orascom Telecom hopes to complete a spin-off of businesses not included in a takeover by Vimpelcom by year-end, its executive chairman said, playing down the risks from a legal challenge by some shareholders.

Under the US$6 billion deal with Russia's Vimpelcom, completed in April, assets including a stake in Egyptian mobile operator Mobinil and Orascom's North Korean operations are being spun off into a new firm, Orascom Telecom Media and Technology, under the control of Orascom's founder Naguib Sawiris.

Orascom shareholders approved the spin-off in April but Egyptian regulators then asked for changes to the balance sheet split that will serve as a basis for the demerger. The revised plan will be put to shareholders on 23 October.

Some Orascom minorities have mounted a legal challenge to the plan by suing Egypt's financial watchdog, but Orascom Executive Chairman Khaled Bichara played down the threat.

"The minority shareholders who are challenging the spin-off hold only a tiny amount of the shares," Bichara told Reuters on Thursday. "Previous shareholder votes related to the Vimpelcom deal have passed with massive majorities of 93 percent and 97 per cent of shareholders."

"Once we get the shareholder approval, things will move forward quickly enough and we hope to complete the spin-off by the end of the year," he said in an interview.

Bichara said there would be no effect on shareholders from the revised demerger arrangements because the combined value of the two companies they would now own will remain the same.

Completing the spin-off "will allow the two businesses to focus on the future without this question of whether it might not happen. It will mean clarity and focus," he said.

The new Vimpelcom that emerged this year after delays and disagreements between its top shareholders has a mix of mature businesses in Russia and Italy and faster-growing, newer operations in Canada and Africa.

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