Shearman & Sterling advised Algeria’s Fonds National d’Investissement (FNI), a strategic investment fund, on the acquisition of a 51% stake in Omnium Télécom Algérie SpA (“OTA” or “Djezzy”, formerly known as Orascom Télécom Algérie SpA) from Global Telecom Holding (“GTH”), a subsidiary of the VimpelCom group, for a price of US$2.643 billion.
The completion of this transaction occurs eight months after the signing of a Share Purchase Agreement between FNI, GTH and VimpelCom Ltd. on April 18, 2014, following extensive negotiations led by Shearman & Sterling, with the support of FTI Consulting on the financial aspects. This new partnership between FNI and VimpelCom, through its subsidiary GTH, is governed by a shareholders' agreement whereby GTH retains the managerial and operational control of the OTA Group while FNI is given veto rights over the major strategic decisions of the Group.
The completion of this transaction also brings an end to all disputes between GTH and the People’s Democratic Republic of Algeria in the international arbitration conducted under the UNCITRAL Arbitration Rules and administered by the Permanent Court of Arbitration (PCA Case No. 2012-20), as well as the disputes between OTA and various public entities before the Algerian courts.
“This highly strategic acquisition for the Algerian State was achieved after three years of complex negotiations between partners from different cultural backgrounds,” comments Emmanuel Gaillard, managing partner of Shearman & Sterling Paris. “We have advised the Algerian State on international issues for more than 50 years and we are delighted to have significantly contributed to the success of this operation.”
“We are thrilled about the success of this complex deal, in which we facilitated the parties’ agreement on the conditions of the transaction and the new governance of OTA, which ensures a balance between the parties while enabling this operator to continue its development,” comments Cyrille Niedzielski, of counsel at Shearman & Sterling in Paris and lead counsel to the negotiating team on the Algerian side.
Djezzy is the leading mobile phone operator in Algeria. The company offers a wide range of services, pre-paid or post-paid, encompassing voice, data and multimedia. Djezzy’s 2013 revenue amounted to US$1.796 billion, with a 2013 EBITDA of US$1.055 billion. As of December 31, 2013, the company’s network included over 17 million subscribers, which makes it the premier mobile phone operator in the country.
The press release published by the Algerian Ministry of Finance indicates that this transaction will allow Djezzy “to continue its development in a dynamic market and to increase investment in its network and equipment in order to maximize the opportunities offered by recent technology developments, including the 3G.”
FNI was advised by Shearman & Sterling, with a team comprising of counsel Cyrille Niedzielski, partner Guillaume Isautier, associates Barbara Le Chapellier, Christophe-Marc Juvanon and Gaspard Bastien-Thierry (all Paris-Mergers & Acquisitions), and counsel Anne-Sophie Maes (Paris-Tax) and Maude Lebois (Paris-International Arbitration).
FTI Consulting acted as FNI’s financial advisor, with a team comprising Mark Nelson-Smith (Affiliate, London), James Nicholson (Senior Managing Director, Paris) and Alexandre Rivière (Director, Paris).