Telenor Decides to Give VimpelCom a Legal Fight

VimpelCom announced today that it received a notice of arbitration from Telenor, against proposed 6 billion dollar deal deal with Wind Telecom S.p.A., to enforce its alleged pre-emptive rights under the VimpelCom shareholders agreement because it believes the Transaction is not a Related M&A Transaction.

The VimpelCom Supervisory Board decided at its January 16, 2011 meeting that the Transaction constitutes a Related M&A Transaction and consequently the VimpelCom shareholders agreement does not provide pre-emptive rights to Telenor.

In the notice, Telenor requested that VimpelCom adjourn the special general meeting of VimpelCom shareholders scheduled for March 17, 2011 and postpone the January 31, 2011 record date for the SGM until after the arbitration panel has reached a decision on the claim.

Citing Telenor spokesman Dag Melgaard, Reuters has reported that company has appointed an arbitrator – a private legal method not decided in public courts — and the tribunal will be based in London.

Earlier, VimpelCom board gave approval for the said deal and rest was to be decided in shareholders meeting on March 17th, 2010.

Reuters recently reported that Telenor has apparently failed to get support from shareholders and is short of the votes it needs on March 17 to nullify the deal.

Telenor has 36 percent of Vimpelcom’s voting stock while Altimo owns 44.7 percent. To be certain of rejecting the bid for Wind, Telenor must be backed by 72 percent of the remaining shareholders, who jointly own 19.3 percent of votes.

Aside from the shareholder views, sources familiar with the situation and analysts expect the vote to go in favor of the Russian company and its top shareholder, a company controlled by Russian billionaire Mikhail Fridman.

A takeover of Wind is backed by Vimpelcom management, the Russian government, and Fridman’s Altimo group.

The deal with Egyptian tycoon Naguib Sawiris would give Vimpelcom control of Mobile group Orascom and Wind Italy and make it one of world’s largest mobile operators. Sawiris would get 30.6 percent Vimpelcom stake in return.

Telenor has vowed to fight the transaction – which it says is too risky and will reduce its influence over the company – putting it at loggerheads with Mikhael Fridman’s Alfa group.

Telenor and Alfa’s telecoms unit Altimo are no strangers to conflict, having fought a series of legal disputes over Vimpelcom’s strategy before a truce was called in 2009.

VimpelCom said that its management and Supervisory Board continue to believe strongly in the strategic rationale for the Transaction which will create a new global telecom player with significant scale and an attractive mix of developed and emerging market assets, well-positioned to realize profitable growth.

If deal goes through, Telenor will be in danger to fall below a 25-percent ownership threshold in VimpelCom. That would dissolve a shareholders agreement with Altimo which gives Telenor three seats on the board and other rights.