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Orascom Telecom to raise $800m war chest

Orascom hopes to shore up balance sheet to stave off potential threat from Algerian tax demand and open up opportunities in the region as conditions improve in its core markets.

Orascom Telecom to raise $800m war chest
Naguib Sawiris said the rights issue will strengthen Orascom's balance sheet as the company tries to resolve a tax dispute in Algeria.

Orascom Telecom said it is planning to raise $800 million through a rights issue to strengthen its balance sheet and ensure it has sufficient funds to cope with a possible $596.6 million tax liability in Algeria.

Orascom Telecom said last month that it received a tax notification from the Algerian tax authority amounting to liabilities of $596.6 million for 2005, 2006 and 2007, a claim which the operator described as being based on "unfounded and unacceptable" allegations of incorrect accounting practices.

Naguib Sawiris, chairman, Orascom Telecom, said: "This transaction will enable the company to strengthen its balance sheet to benefit fully as conditions improve across our core markets while we work towards the optimal resolution of the situation in Algeria. We have chosen to use a rights issue at par as per common practice on the Egyptian Capital Markets."

The rights issue will offer existing shareholders new shares for every existing share in the company at a price of EGP 1 ($0.18) per share, which is equal to the nominal value of an ordinary share in the firm.

Orascom Telecom's largest shareholder, Weather Investments, which owns about 50.6% of the outstanding shares, confirmed that it would subscribe for a minimum of its existing pro rata share in the rights issue.

Orascom Telecom said the rights issue is subject to shareholders' approval at an extraordinary shareholders meeting on December 27.

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