Telenor has called off an arbitration claim, lodged in January 2011, to protect its voting rights in Russian operator Vimpelcom.
The operator has announced that it has bought 234,000,000 VimpelCom preferred shares from Weather Investments II (Weather), for US$374.4 million. Weather is the investment vehicle through which Naguib Sawiris and his family hold their interests in VimpelCom.
Weather gained its shares in Vimpelcom when Vimpelcom acquired WIND Telecom early in 2011. Telenor protested at the time that it would not accept a diminution in its voting rights.
At the time, Telenor held 36% of the voting shares, but saw that fall to 25% after the Vimpelcom/Wind merger. The deal just agreed now bumps Telenor’s voting share to 36.3%, with Alfa Group’s Altimo Telecom holding 25% and Weather’s voting share reduced from 29% to 18%.
The deal is intended to stabilise the ownership and government of the company, and the parties say they have also “entered into certain put and call arrangements regarding the remaining 71,000,000 VimpelCom preferred shares held by Weather”.
“This transaction takes Telenor to approximately the same voting position as a successful outcome of the arbitration process would have achieved, and is therefore a commercial solution we are happy with,” said Jon Fredrik Baksaas, Telenor’s CEO.
“The withdrawal of the arbitration claim will prevent further dilution of the VimpelCom shareholders, and it will enable a more normal corporate governance situation in VimpelCom. We will work to expand the VimpelCom Board to eleven members.”
“I am very happy about this transaction which will allow Weather to participate actively in the Supervisory Board of VimpelCom, will foster improved corporate governance of the company and ensure a better focus of the management on industrial issues in a context in which the existing disputes among the key shareholders have been resolved,” said Naguib Sawiris.