Telenor seeks arbitration over Vimpelcom's merger plans
Norway's Telenor said Monday it will seek arbitration against its Russian subsidiary VimpelCom's and the company's other major shareholder Altimo over VimpelCom's plans to buy Wind Telecom.
The Oslo-based telecoms operator, which has staunchly objected the purchase, said it has turned to the London Court of International Arbitration to obtain a ruling that VimpelCom's purchase plan is not a related merger and acquisition.
Telenor is launching the procedure in a bid to keep intact its rights in VimpelCom, which would go down to 31.7 percent from 39.6 percent for ordinary shares and to 25 percent from 36 percent for voting rights if the purchase went through.
VimpelCom's plans to buy Wind Telecom -- which in turns holds 51.7 percent of Egypt's Orascom and the totality of Italian mobile operator Wind -- has embittered relations between Telenor and the VimpelCom's other major shareholder Altimo.
The cash and stock deal would see Egyptian tycoon Naguib Sawiris, the current owner of Wind Telecom, take a significant share in VimpelCom after a share issue.
Telenor has argued the deal, which would create the world's sixth largest mobile phone operator, does not make strategic or financial sense.
It would relegate Telenor to being VimpelCom's third largest shareholder.
The Norwegian group wants to exercise pre-emptive rights in connection with the new shares issue, which VimpelCom and Altimo object, saying the deal is "a related merger and acquisition transaction" which does not provide for such rights.
"We think we have a strong case, that it is not a related merger and acquisition transaction and that our pre-emptive rights are thus valid," Telenor spokesman Dag Melgaard told AFP.
"If we do not win our court case, we will follow its ruling and that implies we will stop objecting the transaction," he added.
Vimpelcom meanwhile said in a statement Monday it had "received a notice of arbitration from Telenor, in relation to the proposed transaction with Wind Telecom, to enforce its alleged pre-emtive rights under the Vimpelcom shareholders agreement."
Vimpelcom also said Telenor had requested the company postpone a shareholders' vote to approve the deal scheduled for March 17.
The board of the company, Russia's number two mobile operator, approved the deal earlier this month.
Telenor has three out of nine seats on Vimpelcom's board and holds 39.6 percent of the Russian company's stock.
© 2011 AFP