Orascom Starts to Pay off its Debts

Egypt's Orascom Telecom says that it has made an initial debt repayment of US$25 million to its primary network equipment suppliers: Alcatel, Motorola and Siemens. Orascom is currently seeking to negotiate a long-term debt restructuring arrangement with these suppliers. In order to restructure its balance sheet, Orascom Telecom has also reached an agreement to swap US$90 million of loans made to OTH into equity in its various subsidiaries.

The company has now implemented a management fee structure with its major subsidiaries (MobiNil, Fastlink, Mobilink, Orascom Telecom Algeria and Orascom Telecom Tunisia). Orascom will receive a specified percentage of gross revenues in exchange for various operational management services provided to such subsidiaries, which will help to shore up its own funds.

Orascom recently announced the sale of its shares in Sabafon, its GSM mobile telecommunication operations in Yemen to the Al Ahmar Group for a net consideration of US$18.5 million. With the completion of this transaction all litigation between the parties will also be dropped.

The company says that it has made significant progress in its sale of its Sub Saharan Africa assets, where it has signed binding agreements for 10 of the 14 African assets and is currently focused on the closing of these transactions. In addition, Telecel has entered into a Memorandum of Understanding with its largest creditor to restructure its debt and that of its subsidiaries.'"

Posted to the site on 7th October 2002