Vimpelcom is not for sale

The Court of Arbitration of the city of Moscow has scheduled a court session to hear the case of the claim moved by the Federal Antimonopoly Service (FAS) against the the shareholders of Vimpelcom Ltd. – the Norwegian Telenor and Weather Investments, having dismissed the request by the FAS to terminate the case proceedings.

The institution demanded that the agreement of sale and purchase of shares of Vimpelcom Ltd. and the option agreement be ruled illegal, the FAS press service informs.

Andrey Bykasov, Representative of Telenor in Russia, confirmed that the court scheduled the consideration of the case on the merits for November 27.

During a conversation with ComNews, he emphasized that “Telenor believes that the transaction, which enabled the company to restore its stockof Vimpelcom, does not violate Russian legislation and corresponds to the decision by the FAS given at the moment of creation of Vimpelcom Ltd. Telenor has never declared any intention to obtain control over Vimpelcom with Russian law evasion”. A.Bykasov added that Telenor remained open for an extrajudicial settlement and intended to continue the dialogue with the FAS.

Last April, the FAS demanded that the February transaction of purchase of 234 million privileged shares of Vimpelcom (11,26% of the votes) by Telenor from Weather be ruled illegal. As a result of that transaction, the voting share of Telenor grew to 39,5%, the share of Weather decreased to 18,3% (see the news by ComNews dated April 19, 2012).

Since the beginning of the year, the Norwegian company’s share of Vimpelcom Ltd. has grown from 25,01% to 39,51%. According to the FAS, Telenor has increased its share with violation of the Federal Law No. 57 “On the procedure of foreign investments into economic societies, which have strategic significance for ensuring the country’s defenses and the security of the State”. Besides, the institution believes that when Telenor increased its share of Vimpelcom, which owns 100% of the Russian VympelCom, it should have obtained the approval of the Government foreign investments’ committee, as Telenor is a foreign company.

As of the moment of filing of the claim, Telenor owned 35,66% of Vimpelcom’ commercial interest and 39,51% of the votes, Altimo telecommunications holding, member of “Alfa Group” – 31,35% and 24,99% respectively, Weather structure of Nagib Saviris, an Egyptian billionaire – 18,78% and 18,28%.

In August, Weather Investments II sold almost all common shares of Vimpelcom to Altimo, and afterwards Nagib Saviris declared his intention to sell 71 million privileged shares to Telenor before October 1^st.

Last September, the FAS requested that Vimpelcom should not introduce into the register of the Company’s shareholders the transfer of rights to the privileged shares of Vimpelcom, which were to be purchased by the Norwegian Telenor under the option with Weather Investments (see the news by ComNews dated Septer 26, 2012). Despite this, Telenor wnet through with the option agreement with Nagib Saviris and purchased the remaining privileged shares of Vimpelcom from Weather – 3,44% of votes, for 113,6 million USD. That resulted in the increase of the Telenor’s Vimpelcom stock from 39,5% of the votes (35,7% of the economic interest) to 42,95%. The Egyptian businessman retained 0,039% of the votes, which amounted to 0,049% of the telecommunications holding capital.

Radmila Nikitina, acting Head of Antitrust Law Group of the Law Firm "YUST", believes that the FAS has good chances of winning the judicial dispute with Telenor and Weather Investments.

The Law No. 57-FZ prohibits the establishing of control over Russian economic societies, which have strategic significance for ensuring the country’s defenses and the security of the State. Radmila Nikitina said: “Pursuant to the Law, VympelCom OJSC is an economic society of strategic significance for ensuring the country’s defenses and the security of the State, while Telenor is a company controlled by the Norwegian state”.

Therefore, if during the sturdy of the case it is discovered that the transactions between Telenor and Weather Investments resulted in the acquisition of control over VympelCom by Telenor, the FAS will win the case, and the executed transactions will be ruled invalid. The expert said: ”We may suppose that the main strategy of the Norwegian company will be based on the fact that the contested transactions did not lead to the establishing of Telenor’s control over VympelCom OJSC, the largest Russian communications company”.

Radmila Nikitina emphasized that it does not matter, where the companies, which are parties to the transaction, are listed for the purposes of the Law No. 57-FZ. Therefore, the fact that Vimpelcom is listed in the Bermuda Islands is irrelevant. She concluded that in that case, only the fact that the transaction deals with the Russian strategically important company has any significance for the application of the Russian law on strategic investments.

The source of the publication - ComNews.