Orange, Agility ink binding deal to buy 44% of Korek Telecom
France Telecom-Orange and logistics company Agility have signed a binding agreement to buy 44 percent of Iraqi mobile operator Korek Telecom from its shareholders. New backers will allow the Kurdistan region-based operator to build on its leading position in the region and to extend its operations to the rest of the country. Agility and France Telecom-Orange will form a 54/46 JV that will inject new capital into Korek in return for 44 percent of equity. Agility will contribute its existing convertible debt and inject an additional payment of USD 50 million in exchange for a 24 percent indirect stake in Korek Telecom and a USD 100 million 4-year shareholder loan to Korek. France Telecom-Orange will pay USD 245 million for a 20 percent indirect stake in Korek and will extend a USD 185 million 4-year shareholder loan to Korek. France Telecom-Orange estimates that the implied EV/EBITDA multiple attributable to Korek Kurdistan operations is below 5 times. Korek Telecom will use the entire proceeds for the payment of licence fees, reduction of outstanding borrowings, and to improve and expand its network and services. France Telecom-Orange will have an option to increase its indirect stake in Korek to 27 percent in 2014, gaining indirect control of the company and consolidating in its accounts. If this option is exercised, Agility will be able to sell part of its indirect stake in Korek to France Telecom-Orange, resulting in France Telecom-Orange’s indirect interest in Korek increasing up to 39 percent in 2014 and up to 51 percent from 2016. Stephane Richard, France Telecom-Orange’s chairman and CEO, said, “The acquisition of this stake in Korek Telecom is a new step in our policy of expansion outside Europe, and contributes to our stated aim of doubling our revenues in Africa and the Middle East by 2015”.