CAIRO: Trade of Orascom Telecom (OT) and Mobinil on Egypt’s stock exchange were suspended for the second day as OT’s legal battle with France Telecom (FT) continued.
The companies’ shares will not be traded until a further review of the dispute is conducted by market authorities.
“We believe this reaction from the CMA (Capital Markets Authority) is not sustainable and they should let our shares trade or announce the details of the offer, Reuters reported OT CEO Naguib Sawiris as saying.
The seemingly endless OT- FT saga took another turn this week with FT submitting a tender offer to buy all of OT’s holding in mobile phone giant Mobinil.
Subsequently, OT has requested from the Economic Court, North Cairo Circuit to rescind the March 10 share sale agreement of the arbitration award, citing FT’s failure to pay the shares’ price in time, OT said in a statement.
The decision comes after years of wrangling in court between the two sides.
An International Arbitration Court (ICC) ordered earlier this year that OT sell its 51 percent stake in Mobinil’s holding company to FT.
OT continues to tow a hard line on FT’s bid, saying in a statement that OT’s acceptance of FT’s bid “has been rescinded due to France Telecom’s (and its subsidiaries’) failure to pay the price of the shares by the time stipulated in the arbitration award.
After an arbitration court ruled in favor of FT this March, the two sides engaged in legal and public wrangling, as OT repeatedly claimed FT’s failure to submit a proper bid. OT also demanded that FT pay a price per share that was higher than the current market price.
Investors began to see OT’s position as a win-win, pushing up the stock price and leading many to believe that company CEO Naguib Sawiris dragged out the fight for the sake of the share price.
But as the back-and-forth drags into its second months, investors have backed off their bullish stance toward OT.
“We maintain our ‘neutral’ recommendation on both OT and Mobinil, until the status of the deal becomes clearer, said investment firm Beltone Finanacial, in a statement.
In a sign that OT may be getting more serious about parting with Mobinil, which is the company’s only major steak in Egypt, Reuters reported that OT has called on FT to engage it in direct negotiations. FT had yet to respond to the deal.
OT, which operates in a number of countries throughout Africa, the Middle East, and south Asia, would suffer a major source of revenue were it to lose Mobinil. The immense inflow of cash, though, should the deal go through, would give the telecom giant the capital to expand into new markets.
Investors have repeatedly noted that much of OT’s future hinges on how it would spend the billions from the deal.
Mobinil had faltered in the first quarter of 2009, suffering a 6 percent decline in net income, according to Reuters, to LE 424 million.