14 Oct 2010 17:02

Court invalidates deal to merge MegaFon, Turkcell stakes

MOSCOW. Oct 14 (Interfax) - The Moscow Arbitration Appeals Court Thursday invalidated an agreement between Altimo and TeliaSonera to merge their stakes in MegaFon and Turkcell.

The court granted a suit brought by Telecominvest, an Interfax correspondent reported from the court room.

The court rejected TeliaSonera's request that the case be adjudicated under English law.

Lawyers for the defendants in the case - TeliaSonera, Altimo and Allaction - said that the suit ought to be subject to English law. They said the plaintiff, Telecominvest, had not proved that the agreement had infringed on its rights or that it might do so in future.

Altimo and TeliaSonera plan to appeal the ruling.

"We disagree with the court's verdict and will appeal," Altimo spokesman Yevgeny Dumalkin told Interfax.

Telecominvest of course had the opposite reaction. "Telecominvest is satisfied with the verdict. We remain open to negotiations on acquisition of the stakes [in MegaFon] held by Altimo and TeliaSonera," Telecominvest CEO Ivan Streshinsky told Interfax.

Ninth appellate arbitration court in Moscow had annulled the lower court ruling in a hearing on September 2. The court ruled in favor of several procedural motions from Altimo and TeliaSonera, such as a complaint that the lower court ruling was made without the participation of the arbitration judges as required.

The appellate court also ruled that the lower court had violated the interests of Allaction Ltd, an Altimo company that owns 25.1% of MegaFon, since it did not allow the company to take part in the process.

At the September 2 hearing, TeliaSonera argued that the dispute was not subject to Russian adjudication but rather international law. It also claimed that Telecominvest did not have the right to file the suit in the first place.

Altimo and TeliaSonera, the owners of 25.1% and 35.6% of shares in MegaFon, respectively, agreed in November last year to combine their stakes in MegaFon and Turkcell into a single holding. The third shareholder in MegaFon, Alisher Usmanov's AF Telecom, rejected an offer to participate in the alliance.

At the beginning of April, Telecominvest, in which AF Telecom is the majority shareholder, asked the court to enjoin TeliaSonera and Altimo from forming the joint venture in Russia.

On June 22, Moscow arbitration court ruled in favor of Telecominvest, nullifying the agreement on merger of the MegaFon and Turkcell stakes.

Despite the ruling, Altimo and TeliaSonera maintained that the agreement was valid and that their plans to form a joint venture had not changed.

Telecominvest owns 31.3% of MegaFon shares and AF Telecom subsidiary Olimp LLC owns 8%.

TeliaSonera owns 35.6% of shares in MegaFon outright. It also has 26.1% in Telecominvest, giving it effective control of another 8%.

Altimo controls 25.1% of MegaFon shares via Allaction Ltd. Altimo and TeliaSonera own 13.2% and 37% of shares in Turkcell respectively.