Telenor Altimo dispute flares over VimpelCom Wind deal

Telenor has commenced arbitration proceedings with VimpelCom and fellow VimpelCom shareholder, Altimo, over the planned $6 billion cash and share deal to buy Italy's Wind, and control of Egypt's Orascom from Egyptian tycoon Naguib Sawiris.

­Telenor, Norway’s leading telecoms company, and VimpelCom’s second largest investor, has indicated it is seeking the postponement of VimpelCom shareholder meeting scheduled for March 17 to approve the proposed transaction with Wind Telecom, the private company that controls Mr Sawiris’ telecom assets.  Approval of the deal with Wind Telecom would reduce Telenor’s voting rights at VimpelCom from 36% of the voting to 25%, and Telenor is seeking to delay the move until after arbitration proceedings have been concluded, arguing the proposal contravenes the VimpelCom shareholder agreement.

“Telenor has requested an arbitration tribunal to determine that VimpelCom's proposed acquisition of Wind Telecom is not a Related M&A Transaction under the VimpelCom Shareholders Agreement and that Telenor is entitled to exercise its pre-emptive rights under the Shareholders Agreement in connection with the issuance of new VimpelCom shares to the Wind Telecom shareholders if VimpelCom's proposed acquisition of Wind Telecom is completed.”

Anna Ivanova-Galitsyna, representative for Telenor’s Russian subsidiaries, said the company has applied to the London Court of Arbitration, indicating that Telenor was seeking a negotiated outcome.

"This depends on the desire of the interested parties to settle this issue. If Vimpelcom agrees to let Telenor exercise its preferred right to buy out shares, we will not come out against holding.”

VimpelCom’s largest shareholder, Altimo issued a statement condemning the move.

“The claims made by Telenor in connection with the transaction with Wind, are without foundation. Altimo rejects them vigorously and expresses confidence that a decision will be made in its favour. The Norwegian company’s claim that the transaction with Wind is not a non-arms length transaction contradicts the positions of those who have reviewed it. For instance, consultants and independent directors on Vimpelcom’s supervisory board have recommended an additional share issue in favor of Wind Telecom.”

Maksim Savvatin telecom & mobile analyst at IKS-consulting says the conflict needs a compromise or another harmful case will hit Russian Telecommunication giant.

“The shareholders dispute ignited just before the New Year in the wake of Vimpelcoms’ intentions to step into Wind Telecom capital.  This is another stage of the conflict which raises a lot of rumors around the deal. The major disagreement is based on Telenor share threats following Vimpelcoms scheme of acquisition which can slash Telenors shares in the company and through company dividends an so on. Another issue is that Wind Telecom Algeria assets considered to be very risky and with excessive debt burden. The deal has not been signed yet and is planned for the 1 quarter of 2011.”