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Monday, 10 June 2019

Veon agrees to pay EGP 2.2 bn to settle GTH’s tax dispute

EXCLUSIVE- Veon looks set to pay up to EGP 2.2 bn to settle Global Telecom Holding’s tax dispute in Egypt: Telecom group Veon has agreed in principle to pay as much as EGP 2.2 bn to end a tax dispute between Egypt’s Tax Authority and Veon subsidiary Global Telecom Holding (GTH). A final agreement could come as early as mid-month, two senior government officials told Enterprise. The settlement will be paid in two installments, one after the signing and another after Veon’s MTO for the 42.3% of GTH that it doesn’t already own. The said Veon will make the payment in USD. Veon recently took over negotiations on behalf of GTH and was advised in the talks by Shalakany Law Firm.

Background: The Egyptian Tax Authority ordered a seizure of EGP 990 mn in funds from GTH’s local bank accounts in 2018 over a 2016 tax dispute. Some market observers have claimed the ongoing dispute — which has embroiled both retail investors and a handful of “activist” institutional investors — has obstructed Veon’s efforts to take over its unit and led it to withdraw an earlier MTO. The status of GTH is widely seen as an ‘overhang’ on the stock exchange, settlement of which could release new liquidity into the market as smaller shareholders agree to sell to Veon.

On a related note: GTH’s board postponed the general assembly that was planned for yesterday to vote on a rights issue for a capital increase that was supposed to take place in lieu of the withdrawn MTO till 27 August, the company said in a bourse filing (pdf).

 

Corrected on 10 June 2019

Sarie Eldin & Partners acting as advisers to Veon was corrected to Shalakany Law Firm.

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