Fridman's Altimo to scrap Vimpelcom investor deal

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Stocks

Telenor ASA
TEL.OL
kr89.40
+0.10+0.11%
04/15/2011

Vimpelcom Ltd
VIP.N
$14.55
+0.16+1.11%
04/15/2011

Orascom Telecom Holding SAE
ORTE.CA
£4.32
-0.12-2.70%
8:36pm GMT+0700

MOSCOW | Sun Apr 17, 2011 11:23am EDT

(Reuters) - Russian billionaire Mikhail Fridman's Altimo said it wants to scrap its 2009 shareholder agreement with Norway's Telenor (TEL.OL) in Vimpelcom (VIP.N) to reflect the Russian telecom group's recent blockbuster merger.

Vimpelcom on Friday closed a $6 billion cash-and-shares deal for 51.7 percent of Orascom Telecom (ORTE.CA) and 100 percent of Italy's Wind, giving their Egyptian owner Naguib Sawiris 30.6 percent of voting shares in the united group.

"With the closing of the Wind transaction... there are three major shareholders with approximately equal stakes in the company. In light of these developments, Altimo believes that the current Shareholders' Agreement is no longer appropriate," Altimo said in a statement late on Friday.

Altimo and Telenor thrashed out the shareholder agreement in the autumn of 2009 after years of corporate brawling, striking a deal that sparked an uneasy and short-lived era of peace between the two then 40 percent co-owners.

That came to an abrupt end when the Norwegian group announced its opposition to the Wind deal, claiming it made no financial or strategic sense for Vimpelcom, before being outvoted at a special shareholder meeting on March 17.

DESTABILSING

The shareholder agreement saw the appointment of three independent directors onto Vimpelcom's board. These were intended to act as an arbiter in the event of a deadlock over strategic decisions between Altimo and Telenor.

Both Altimo and Telenor are allowed to nominate a further three directors to the board.

The deal also gives Altimo and Telenor pre-emptive rights to new shares, allowing them to avoid stake dilution in the case of Vimpelcom issuing new shares to a third party.

Telenor is currently pursuing an arbitration trying to restore its pre-emptive rights after the Wind deal was classified as a related transaction giving no such rights to any of the shareholders.

The deal saw Telenor's and Alfa's voting stakes fall to 25 percent and 31 percent from 36 percent and 44.7 percent respectively.

Having been forced to give up on trying to stop the Wind deal from going ahead, Telenor is instead trying to restore the former size of its stake, which would in turn leave Altimo as the smallest party.

"We will continue the London arbitration and will work to regain the position we had (before the Wind deal)," Telenor spokesman Dag Melgaard told Reuters, adding Telenor's commitment to staying in Vimpelcom has not changed.

In the Friday statement Altimo said the termination of the agreement was aimed to "ensure proportional rights for all minority shareholders" and "avoid further destabilising conflicts between major shareholders."

It plans to sell part of its preferred shares in Vimpelcom that will be enough to reduce its voting rights to below 25 percent, triggering a clause that will spark the termination of the agreement.

(Reporting by Maria Kiselyova, Editing by John Bowker and Mike Nesbit)