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Monday, 28 January 2019

Veon might be taking Global Telecom private

M&A WATCH- Veon might be taking EGX-listed Global Telecom private: Global Telecom Holding’s (GTH) majority shareholder Veon is considering taking GTH private, the company said in a bourse filing (pdf). GTH’s board has postponed a general assembly originally called to discuss an EGP 11.2 bn rights issue to take time to consider the new developments, GTH said in a separate statement (pdf).

The FRA is monitoring: The Financial Regulatory Authority is monitoring the situation and will see what mechanism Veon will use to take the company private and consequently will decide if it will be able to vote in the general assembly on the decision or not, the market regulator said in a statement to the bourse.

Possible scenarios: Veon will need to make a mandatory tender offer at a price range between EGP 5.31-7.90 per share, Shuaa Securities said (pdf) in a research note on Sunday. If the move to take GTH private does not go through, GTH would have to proceed with the capital increase or restructure its debt, according to Shuaa.

Market reacts: GTH’s shares jumped 10% on the EGX yesterday, the biggest leap in three months, Bloomberg notes. The shares’ value has been slashed in half over the past year. The GTH news, and the prospect of fresh money available in the market from a take-public bid, sent the EGX30 up 2.3% by the close of trading yesterday.

Background: Amsterdam-based Veon Holdings withdrew a mandatory offer in April last year to purchase the 42.3% of GTH that it doesn’t already own after failing to get regulatory approval. GTH intended to use the proceeds from the now-postponed rights offering to meet the company’s financial obligations through to the end of 2019, including loans from its main shareholder. Yesterday’s statement noted that Veon plans to support the company’s “immediate funding requirements” vis-a-vis its debt obligations and interest payments to bondholders.

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