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Celtel buys into east African telecoms

Pan-African coverage moves closer for Celtel with a deal that raises the possibility of further debt financing.

Deal: Acquisition of KenCell Communication by Celtel

Finance: $70 million bridge loan and $230 million bank guarantee

Arranger: ING Bank

Date: May 26 2004

Pan-African mobile phone company Celtel International has closed one of the largest corporate deals ever seen in east Africa, paving the way for a local bond issue in the autumn.

At the end of May, Netherlands-based Celtel, formerly known as MSI Cellular, announced that it had paid $250 million for a 60% stake in Kenyan mobile service provider KenCell Communication.

ING Bank arranged a $70 million bridge loan and provided a $230 million guarantee.

The deal was complicated. Celtel did not buy its KenCell shares directly but from one of the Sameer Group of companies that invest in the agriculture, banking, infrastructure and IT sectors throughout east Africa.

Sameer Group?s managing director, Naushad Merali, is one of Kenya?s richest entrepreneurs. According to an interview in The East African Standard, he controls companies with over KSh20 billion ($253 million) in assets.

Celtel couldn?t buy its shares directly because, as a minority shareholder, Sameer Group had pre-emptive rights. Sameer Group owned (and still owns) 40% of KenCell. The previous majority shareholder was Vivendi Telecom International.

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