An Amsterdam-based carrier appears to be one step closer to becoming the new partner of Canada’s Wind Mobile.
VimpelCom Ltd. said Tuesday the way has been cleared for a special meeting of shareholders March 17 to approve what it calls the merger between it and Egyptian-based Wind Telecom S.p.A. Investments, which controls Orascom Telecom Holdings.
Orascom is Wind Mobile’s main backer, owning 65 per cent of its equity and much of its debt. Wind’s controlling shareholder is Toronto telecom entrepreneur Anthony Lacavera.
It isn’t known yet, however, whether VimpelCom will continue backing Wind Mobile to the same level as Orascom. A VimpelCom spokesperson said the company won’t comment until the deal is complete.
Wind Mobile chairman Anthony Lacavera has had little to say about the deal other than to assume that VimpelCom will see the value that Orascom had in investing in Canada and will continue support.
The special shareholders vote was in doubt after one of VimpelCom’s main shareholders, Norway’s Telenor Group, asked the English Commercial Court for an injunction stopping the session to protect its financial rights.
Telenor says the US$6.5 billion deal, which would create the world’s sixth largest mobile telecom company by subscribers, will dilute its holding in VimpelCom. Separately, Telenor demanded an arbitration hearing with VimpelCom over share issues.
In a press release Tuesday, VimpelCom said the commercial court rejected Telenor’s request for the injunction unless it got pre-emptive shares. The court also refused to accept Telenor’s alternative request to have pre-emptive shares issued to it in escrow pending the outcome of the arbitration hearing, the release said.
However, Telenor issued its own press release claiming a victory of sorts. VimpelCom, Wind Telecom’s parent company and Russia’s Altimo Holdings & Investments Ltd – the other major VimpelCom shareholder and the telecom investment arm of the Alfa Group – promised that if the arbitration panel rules in Telenor’s favour it will quickly get its pre-emptive rights shares.
Telenor also got a promise that if it won the arbitration it would be awarded damages in the amount of lost dividends on the pre-emptive right shares. Altimo promised that it would not to take any action, including transferring its shares, that would cause Telenor and Altimo’s combined voting percentage in VimpelCom to fall below a simple majority.
There were other assurances made, the most significant of which is that Telenor will keep its voting stake in VimpelCom.
“Telenor is pleased with the court’s determination to accept undertakings” equal to an injunction, a Telenor spokesman said in the press release. “Telenor remains confident that the arbitration tribunal will recognize Telenor’s right to receive the pre-emptive right shares if VimpelCom’s proposed acquisition of Wind Telecom is completed.”
For its part, VimpelCom CEO Alexander Izosimov said his company is pleased the court agreed on the importance of allowing the March 17 vote to go ahead. “VimpelCom believes strongly in the merits of this transaction and is committed to continuing to act in the best interests of all shareholders,” he said in a statement.
VimpelCom operates carriers in Russia, Ukraine, Kazakhstan, Uzbekistan, Tajikstan, Georgia, Armenia, Kyrgyzstan, Vietnam and Cambodia under the “Beeline” and “Kyivstar” brands.
Wind Telecom owns all Wind Italy and 51.7 per cent of Orascom. Orascom operates wireless companies in Algeria, Bangladesh, Egypt, Pakistan and North Korea in addition to its holdings here in Wind Mobile.
The enlarged VimpelCom will operate in 19 countries around the world with over 173 million mobile subscribers.
In Canada, Wind Mobile’s competitors are saying the startup needs no special protection in the upcoming 700 Mhz auction with a backer like VimpelCom behind it.