Vimpelcom shareholders approve deal to buy WellCOM; Telenor challenges validity of decision

15 Sep 2005

At the rescheduled Extraordinary General Meeting of Shareholders (EGM) convened yesterday by Eco Telecom, part of the Alfa Group of companies, Vimpelcom shareholders approved the contentious acquisition of Ukrainian mobile operator CJSC Ukrainian Radio Systems, which trades under the brand name WellCOM. According to Vimpelcom’s hastily delivered press release, holders of approximately 79.8% of the total number of its outstanding voting shares were represented at the meeting. 51.2% voted in favour of the purchase, with 27.9% voting against and 0.8% abstaining. Meanwhile, holders of ADRs at the EGM voted overwhelmingly 89.3% in favour of the motion to acquire the cellco. However, the validity of the EGM has been challenged by Telenor which sent a letter to Vimpelcom prior to the meeting pointing out that in its opinion ‘the EGM has not been validly convened… and the EGM and any decision of the EGM are subject to challenge and the possibility of being declared null and void by a Russian court’. Telenor, which has been in dispute with its Russian partner over the fate of WellCOM for months, also asserts that even if approved by the EGM, ‘the acquisition of the Ukrainian cellco requires the prior approval by no less than 80% of the board and that management should not attempt to complete the acquisition prior to receipt of such board approval.’ The saga continues.