Telesystem International Wireless Inc. (TIW) announced it had reached an agreement with US-based Emerging Markets Partnership (EMP) investment company on the sale of 5.68% of the currently issued and outstanding share capital of Romanian mobile telephony market leader MobiFon for a total cash consideration of $42.5 million.
TIW's interest in ClearWave is 85.6%. ClearWave in its turn holds 63.5% in MobiFon. Therefore TIW is the majority shareholder of the Romanian mobile telephony operator. Another significant shareholder of MobiFon is British telecommunications group Vodafone (20.1%).
The transaction announced last week is expected to close in the first quarter of 2003 and is subject to the fulfilment of certain conditions and rights of first refusal by other MobiFon shareholders.
ClearWave intends to use substantially all the proceeds from the sale to EMP to repay intercompany demand notes due to TIW and pay related interest. TIW plans to use the proceeds from the repayment of these notes to reduce indebtedness at the corporate level (i.e. repay a $62.4 million credit).
TIW early in December finalised the amendment extending its senior secured corporate credit facility to June 30, 2003. Assuming the above-mentioned repayments and considering its other available cash resources, TIW now estimates that its senior secured facility will be fully repaid prior to its stated maturity, without selling assets or seeking new financing.
"TIW has the possibility to repay part of its debts by selling a minority interest in Connex. This change in the shareholding structure will not impact on the activity or operations of Connex in Romania in any way," Terry Lobraico, Connex financial vice-president told Ziarul Financiar.
The buyer of the interest, the US-based EMP is one of the founding investors of the other European mobile telephony operator held by TIW, Cesky Mobil. TIW's global consolidated debt amounted to $977.5 million by September 30, 2002, $287.3 million of which at the corporate level. MobiFon at the same date was totalling $267.7 million in debts. The remaining $422.5 million account for Cesky Mobil's debts.
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