Telenor makes new move to keep VimpelCom stake intact

Norway’s Telenor said Monday it had launched legal action to keep its stake in VimpelCom intact if the Russian company goes ahead with the disputed acquisition of Wind Telecom.

Telenor said it has asked the London Court of International Arbitration to issue an injunction requiring VimpelCom give it the pre-emptive rights it believes it is entitled to if its Russian partner goes ahead with the deal despite its stated opposition.

The Norwegian telecom operator asked that its VimpelCom shares “be placed in escrow until the arbitration tribunal has reached a decision.”

VimpelCom’s plans to pay some $6.5 billion to buy Wind Telecom — which holds 51.7 percent of Egypt’s Orascom and all of Italian mobile operator Wind Telecomunicazioni — have embittered relations between Telenor and VimpelCom’s other major shareholder Altimo.

If the cash and stock deal succeeds, Telenor’s stake in Vimpelcom would fall from 39.6 percent to 31.7 percent in terms of ordinary shares, and from 36 percent to 25 percent in terms of voting rights, making it just the third largest shareholder in the Russian company.

Telenor has argued the deal does not make strategic or financial sense.

Altimo, meanwhile, is in favour of the deal, which would create the sixth largest mobile telecom operator in the world.

The Norwegian group wants to have a pre-emptive right to buy the new shares that will be issued to help fund the acquisition.

VimpelCom and Altimo object to this, saying the deal is “a related merger and acquisition transaction” which does not provide for such rights.

Telenor requested on January 28 that the London arbitration court rule on the matter.

“If the arbitration tribunal agrees with Telenor that the Wind Telecom transaction is not a related M&A transaction, then the shares will be released to Telenor and the purchase price released to VimpelCom,” Telenor said Monday.

“Should the tribunal decide that the transaction is a related M&A transaction, the shares will be returned to VimpelCom for cancellation and the purchase price returned to Telenor,” it added, insisting the proposed arrangement was “fair and equitable.”

Altimo currently holds 39.2 percent of VimpelCom’s ordinary shares and 44.7 percent of the voting rights. These holdings would slip to 31.4 percent and 31 percent respectively if the Wind Telecom acquisition goes through.

Wind’s current owner, Egyptian tycoon Naguib Sawiris, would hold 20 percent of the shares and 30.6 percent of voting rights after the deal.

Vimpelcom has called a special general assembly on March 17 to examine the deal but Telenor has requested that the meeting be delayed.