Orascom Telecom (OT) (share price: USD26.05, earnings per share FY09e: USD2.77) announced that "as a result of the Algerian tax claim made against Orascom Telecom Algeria (OTA), set forth in OT's pres...

Orascom Telecom (OT) (share price: USD26.05, earnings per share FY09e: USD2.77) announced that "as a result of the Algerian tax claim made against Orascom Telecom Algeria (OTA), set forth in OT's press release dated 17 November 2009, OT has obtained a waiver from the Majority Senior Secured Lenders under its USD2.5 billion credit agreement relating to the existence of a material tax claim. The waiver expires on 26 January 2010.    OT is currently seeking the approval of its Majority Senior Secured Lenders for a longer term solution to address the impact of the Algerian tax claim based on the current plan to raise equity through a rights issue.  Any proposed permanent waiver is expected to be specific in nature.  It is also expected that there will be an inter-conditionality between the granting of this permanent waiver and the completion of the proposed rights issue announced on 13 December 2009."   OT will hold an extraordinary general assembly meeting, December 27th, 2009, in order to decide upon a capital increase, worth up to EGP5.0 billion, through a rights issue at the par value per share, of EGP1.00, in order to strengthen its balance sheet. Subject to the approval of the EGM, the date of the subscription period will start 15 days after the date of publishing a public subscription notice in the Egyptian newspapers.   Weather Investments, OTH’s largest shareholder, which owns approximately 50.6% of the outstanding shares, has communicated to OT its commitment to subscribe for a minimum of its existing pro rata share in the Rights Issue. The size of the Rights Issue proposed to the EGM is up to EGP5.0 billion, which will allow the company to issue a rights offering of USD800 million or EGP4,392 million. They believe that Orascom Telecom will obtain a longer-term waiver for the debt covenant related to the existence of a material tax claim in Algeria, especially that the USD2.5 billion credit facility is secured. On the other hand, OT is planning to raise USD800 million in a capital increase, to be decided upon today, which, as stated above, could grant a "specific" waiver to the debt. It should be noted that Orascom Telecom's USD2.5 billion loan constitutes the biggest portion of its holding level debt, and is a five-year credit facility due in 2013.   The company's other debt obligations include a USD750 million high yield bond (due in 2014) and USD230 million indexed bond (due 2012 and 2013), leading to a total net debt position (at the holding level) worth USD3.7 billion, as of September 2009. OT has outstanding debt repayments worth USD40 million in 2009, USD341 million in 2010, USD376 million in 2011 and USD773 million in 2012.