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MobilCom soars on loan deal
FRANKFURT, Germany -- Shares in MobilCom soared on Monday after France Telecom said it had cleared the final financial hurdle to help rescue its German mobile phone industry partner. France Telecom said on Sunday it had arranged a multi billion euro loan repurchasing agreement with banks, as well as telecom giants Nokia and Ericsson, the final condition needed for a MobilCom rescue plan to go ahead. MobilCom (AMOB) was up almost 15 percent to 5.18 euros in midday Frankfurt trading, while France Telecom (PFTE) gained 2.8 percent to 18.50 euros in Paris. France Telecom and MobilCom agreed last month to end their partnership, which was supposed to give them a big chunk of the German market for third-generation mobile phone services. France Telecom said the 6.1 billion euro deal includes 5.9 billion in loans plus interest and costs accrued until March 15, 2003. "Under the agreements entered into on November 30, 2002 with the agreements with the ... banks, Nokia and Ericsson, France Telecom will repurchase the loans granted to MobilCom for a total maximum amount of 6.1 billion euros," France Telecom said in a statement. "France Telecom will then have accomplished a final and irrevocable resolution of the termination of its ... project in Germany without any major increase in its consolidated debt." MobilCom pulled out of its third generation investments and cut virtually all jobs in that unit when France Telecom, which bought a 28.5 percent stake in MobilCom to conquer the German mobile market in 2000, cut off funding in September. MobilCom has teetered on the brink of insolvency ever since, and has announced a restructuring plan to cut a third of its workforce. Reuters contributed to this report.
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