OTA cleans up in Algeria

Algeria maintains its consistent showing in our annual Best Deals awards by supplying a winner for 2006 in the form of a US$327mn equivalent three-tranche deal for Orascom Telecom Algérie (OTA). OTA is the leading mobile operator in Algeria with 10mn subscribers.

The transaction is the largest ever clean syndicated loan in Algeria. It involves the first buyer credit guaranteed by French export credit agency (ECA) Coface in Algerian dinar and is expected to constitute a benchmark for future similar projects.

The deal is a success in terms of syndication as the size of the local commercial and Coface tranches is quite large given the liquidity of the market. Furthermore, the deal answers perfectly OTA’s request to have indebtedness in local currency. In all, say banks involved, it is the result of the close co-operation of all parties: mandated lead arrangers (MLAs), lenders, borrower, Coface, supplier and lawyers involved.

The facilities consist of three tranches :

  • A buyer credit guaranteed by Coface in Algerian dinar, refinancing a buyer credit in US dollars for the countervalue in dinars of US$137.5205mn (four years repayment).
  • A buyer credit guaranteed by Euler Hermes, the German export credit agency, for a maximum amount of €66.810mn (four years repayment).
  • A dinar commercial loan split between a revolving tranche and a term loan tranche, for an amount of Ad7.5814bn (five years door-to-door).

Calyon and Citigroup were MLAs of three facilities, financing the purchase of new telecommunication equipment for the extension of OTA’s GSM network.

Calyon was intercreditor agent and international agent of the Coface buyer credit in Algerian dinar and Hermes agent. Citibank was local agent for the Algerian Coface buyer credit and the dinar loan.

Myrjam Tschoeke, director, responsible for Africa within the export and agency finance group at Citibank, says: “Algeria remains one of the key franchises for Citigroup export and agency finance in the CEEMEA region. Given the country’s increasing political stability and strong macroeconomic fundamentals, we expect further strong investment in the country’s infrastructure. As the foreign bank with the longest uninterrupted presence in Algeria, Citigroup can combine the benefits of local insight with the strength of its global product capabilities.”

The local currency facility allowed OTA to reduce its foreign exchange exposure and build relationships with the local banking community. Local banks raising the dinar are all subsidiaries of foreign banks: Arab Bank, Arab Banking Corp, BNP Paribas, Calyon, Citigroup, and Société Générale.

Coface and Hermes granted support at very favourable terms, claim the MLAs, with 95% comprehensive risk cover offered. This is up from 85% cover for previous Coface and Hermes-covered loans to OTA.

Coface has already agreed to convert its guarantee into a local currency cover, allowing a dinar refinancing of the US$138mn Coface facility.

OTA is a subsidiary of Orascom Telecom Holding (OTH). It operates under the Djezzy brand name. Alcatel CIT and Siemens are two of OTA’s core suppliers of equipment.

Deal information:

Borrower: Orascom Telecom Algérie spa (OTA)
Amount: US$327mn equivalent
Split into:

  • US$138mn Coface facility – 4yr
  • US$86mn Euler Hermes facility – 4yr
  • Ad7.5814bn (US$104mn) – 5yr, divided into US$55mn and US$49mn equivalent

Mandated lead arrangers: Calyon; Citigroup
Lenders (US$): Calyon; Citigroup
Lenders (Ad): Arab Bank; Arab Banking Corp; BNP Paribas; Calyon; Citigroup; Société Générale
ECAs: Coface; Euler Hermes
Tenor: 4-5yr
Law firms: Cabinet De Pardieu Brocas Maffei (lenders – France); Mustapha Hamza (lenders – Algeria); White & Case (borrower)
Date signed: May & September 2006