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October 01, 2012 17:14

Telenor uses option to buy 3.5% of Vimpelcom from Sawiris (Part 2)

MOSCOW. Oct 1 (Interfax) - The Norwegian telecom Telenor, disregarding the prohibition by a Russian court, has exercise an option agreement with Egyptian billionaire Naguib Sawiris's Weather Investments II S.a.r.l. to buy from him 71 million preferred shares (3.483% of votes) in Vimpelcom Ltd on September 28.

"Under the terms of the option agreement Telenor entered into with Weather in February 2012, Telenor was obligated to take delivery of Weather's remaining VimpelCom Ltd. preferred shares following Weather's exercise of its put option," Telenor spokesman Dag Melgaard said in an October 1 Telenor press release. "However, as a business matter and in view of the history of the relevant transactions, we seek a solution including Altimo, Bertofan and Telenor that gives Altimo and Telenor parity in VimpelCom Ltd. To this end, Telenor proposes that Altimo and Telenor offer to buy the preferred shares held by Bertofan Investments Limited for a full and fair price, and in such proportions as will secure equal ownership positions for Altimo and Telenor after such transaction," he said.

The option had to be exercised before October 1.

Per the option agreement, the price tag was $113.6 million.

This raises Telenor's stake in Vimpelcom to 42.95%, while the economic interest of 35.7% remains unchanged, since Vimpelcom prefs confer voting rights, but do not trade and do not have dividends paid on them.

"Telenor invites its co-shareholder Altimo to work with Telenor to restore proper corporate governance in VimpelCom Ltd. through supporting Telenor's parity initiative. Telenor seeks no change to the corporate governance structure of VimpelCom Ltd., including the current board structure. Further, Telenor also calls upon the Russian authorities to support this initiative in order to find a constructive solution that would satisfy all parties and to avoid escalation of the current conflict on the basis of the purported extra-territorial injunctions issued by the Moscow Arbitrazh Court," the press statement says.

"Telenor proposes a concerted and comprehensive effort to restore proper corporate governance in VimpelCom Ltd. We call upon all stakeholders to show pragmatism and offer support to this effort, which clearly would be helpful to the company and all shareholders," Melgaard said.

The Federal Antimonopoly Service sees violations of Russian law in the deal for Telenor to buy the shares from Sawiris. "FAS chief Igor Artemiyev has expressed his regret over this," the FAS press office told Interfax.

The option is part of a larger deal in which Telenor acquired 234 million Vimpelcom preferred shares from Sawiris for $374.4 million in February. Telenor increased its voting stake in Vimpelcom to 35.66% from 25.01% (the stake was later increased further to 39.51%), and Sawiris reduced his voting share to 18.28% (economic interest of 18.78%).

The FAS is disputing the deal in court as it considers that it should have been approved by the government's foreign investment commission because a foreign company would be increasing its stake in Vimpelcom Ltd, which owns 100% of OJSC VimpelCom (RTS: VIMP), a strategic Russian company. The court next hearing will be held on October 17.

The FAS last week asked Vimpelcom Ltd. not to register the transfer of Vimpelcom preferred shares that Telenor planned to buy from Weather Investments in its shareholder register. In a letter to Vimpelcom headquarters in Amsterdam, FAS Chairman Igor Artemyev said the Moscow Arbitration Court imposed an injunction stopping Telenor and Weather from going ahead with the option deal due to a claim filed by FAS.

The Ninth Moscow Arbitration Appeals Court on Monday upheld a previous court ruling of April 24 to impose an injunction to stop Norway's Telenor from buying more shares in telco Vimpelcom Ltd and Egyptian billionaire Naguib Sawiris.

The injunction is related to a suit brought by the Federal Antimonopoly Service. The option is for Telenor to buy the remaining 71 million preferred shares from Sawiris's Weather Investments II.

Despite the injunction, Sawiris said in August that he wanted to take the option up, and Telenor, which said the option was binding and signed under American, not Russian jurisdiction, that it intended to fulfill the option by October 1.

The court in April not only banned the option from being exercised. It also stopped Vimpelcom Ltd from electing new governing bodies at OJSC Vimpelcom. On May 23, the court banned OJSC Vimpelcom from paying dividends of 19 billion rubles for 2011 to the parent company. The hearing of an appeal against that court decision has been scheduled for November 12.

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