Board members of the Orascom Telecom Holding decided last Friday to put forward to shareholders; a name change, shares conversion and a mutual service agreement.
The board members proposed the company rebrand itself as ‘Global Telecom Holding,’ as a part of the Vimpelcom acquisition and demerger deal, Orascom announced Sunday.
“As a part of the Vimpelcom acquisition and demerger, the company and its subsidiaries are required to cease using the Orascom name, designs and logos before the end of 2012,” Orascom said.
OTH said that the company’s shareholders will approve the new name at an ordinary general assembly and extraordinary general assembly, expected to convene next month.
Vimpelcom, a Russian mobile service provider, took control of the Egyptian OHT last year, acquiring 51.7 per cent stake of the company’s shares, and 100 per cent of OTH’s Italian subsidiary; Wind.
Despite the opposition of Telenors, the Norway-based holder of 39.51 per cent of Vimpelcom’s shares plus a 36 per cent voting shares, to the deal, Vimpelcom board of directors approved the purchase of OTH’s assets for a revised $6.5 billion merger deal in 2011.
Last year’s deal stipulates that Vimpelcom was to pay Naguib Sawiris, CEO of OTH, around $1.5 billion in cash, in addition to 330.6 million common and convertible shares, according to Reuters report, quoted by AhramOnline January 2011.
OTH’s board of directors also proposed to shareholders to approve a mutual service agreement that targets creating synergies and operational efficiencies among the group entities in addition to managing cost, Orascom said.
The mutual service agreement will continue for two years with fees of actual accounting cost plus a mark-up of 5 per cent, in addition to maximum $3.5 million annual fees payable to the Russian parent company, Orascom said.
The board of directors also proposed to shareholders the conversion of the 65.08 percent non-voting shares, which Orascom Telecom Canada (OTC) Limited holds in Globalive Investment Holding Corp (GIHC), into voting shares.
The conversion proposition was allowed by changes in Canada’s foreign ownership laws, introduced in mid-2012.
OTC conversion means that OTH will take control of GIHC, the parent company of Wind Canada and Globalive Canada that “An approval from the Canadian investment authorities is required,” Orascom said. This approval is expected to be obtained by the close of 2012 or early 2013.
OTC Ltd currently controls 32.02 per cent of the total outstanding voting shares and 65.08 per cent of the total outstanding shares of GIHC.
OTC Ltd’s conversion entails, amongst other things, the restructuring of OTH’s shareholders loans to the GIHC group and the cancellation of accrued interests of approximately 450 million in Canadian dollars, Orascom said.