April 21 (Bloomberg) -- VimpelCom Ltd. rose to a six-week high in New York after agreeing to sell a majority stake in its Algerian unit Djezzy in a deal that provides the phone company with $4 billion in cash as it strives to cut debt.
The operator, co-owned by Russian billionaire Mikhail Fridman and Norway’s Telenor ASA, advanced 2.8 percent to $9.25 today. The shares climbed to the highest level since March 6 as the gain extended an 8.6 percent rally on April 17, the day before the deal was announced. U.S. equity markets were closed on April 18 for a holiday.
VimpelCom said April 18 it agreed to sell 51 percent of Orascom Telecom Algerie SpA, or Djezzy, to the Algerian National Investment Fund for $2.64 billion. Djezzy will also pay a $1.86 billion dividend to VimpelCom’s Global Telecom Holding SAE unit before the transaction closes. VimpelCom will get $4 billion on after-tax basis, it said.
“This is a favorable resolution as Djezzy has been under threat of nationalization for at least three years and couldn’t distribute profit to the parent,” Konstantin Belov, an analyst at UralSib Capital in Moscow said by phone today. “Now, VimpelCom will get cash from Algeria and reduce its debt pile which has been curbing the company from paying adequate dividends.”
Amsterdam-based VimpelCom is striving to reduce $27.5 billion of debt which resulted from acquisitions of assets in Italy, Algeria and Asia from Egyptian billionaire Naguib Sawiris. The company canceled its final 2013 dividend in January and set future payouts at a fraction of the earlier level until it reduces the level of debt relative to earnings.
To contact the reporter on this story: Ilya Khrennikov in Moscow at email@example.com