Take the Weather with you? Altimo accuses fellow shareholders of share violation

7 Jun 2012

Alfa Group, the Russian investment vehicle owned by billionaire Mikhail Fridman, has ignited a fresh war of words with Weather Investments and Telenor, its fellow shareholders in international telecoms group Vimpelcom. In a filing with the US Securities and Exchange Commission (SEC), Vimpelcom has revealed that Altimo, Alfa’s telecoms arm, has accused its counterparts of violating the group’s by-laws in connection with Telenor’s 15 February purchase of 234 million preferred shares from Weather, and the agreements entered into between the two parties in connection therewith.

Altimo claims that Telenor and Weather violated the provisions contained in Section 16 of the company’s by-laws, by not commencing a mandatory tender offer (MTO) as a result of the ‘Preferred Share Transactions’. Further, Altimo asserts that Telenor and Weather have formed a ‘group’ owning a more than 50% voting interest in Vimpelcom. However, Altimo acknowledges that it appreciates that it is not currently possible for the company’s supervisory board to require Telenor and Weather to launch an MTO, due to the position adopted by the Russian Federal Anti-Monopoly Service, which filed a claim in the Russian capital’s principal commercial court, in April this year.

For its part, Telenor has denied that it has entered into a partnership with Weather. Company spokesman Dag Melgaard told Reuters: ‘Telenor is not in partnership or in a group with [Weather Investments owner Naguib] Sawiris, so this is absurd’. With reference to the pending expiration of Altimo’s twelve-month standstill agreement, Melgaard added: ‘We see this as an attempt to push Vimpelcom’s share price down, since we are approaching a point in the calendar, 11 June, where they can buy shares in the company’.

This new development marks the latest episode in a particularly fractious power struggle between Telenor and Altimo, which began in 2006. Ironically, Telenor strongly objected to Vimpelcom’s USD6.5 million merger with Sawiris’ Weather Investments, complaining that the deal ‘didn’t make strategic or financial sense for Vimpelcom’s shareholders’. Following the completion of the deal, Telenor expressed concerns that Altimo and Weather would have the required majority to alter the structure of the board, potentially freezing Telenor’s influence out of all major decisions, although it now appears that the tables have turned.

Russia, Altimo (part of the Alfa Group), Telenor Group, VEON