Mobilcom Founder: Letter Aids Claims Vs France Telecom

DUESSELDORF -(Dow Jones)- Gerhard Schmid, the founder and former chief executive of German firm Mobilcom believes he has a good chance of making prior minority shareholder France Telecom liable for the financial consequences stemming from its termination of a contract between the two companies about three years ago.

According to a letter issued by the regional court in Kiel, a copy of which Dow Jones Newswires has seen, a judge says a settlement contract offered by France Telecom would be invalid if a ruling from December 2005 by the higher regional court of Schleswig becomes legally effective.

The judge in Schleswig ruled Mobilcom shareholders were not adequately informed of the terms and consequences of the settlement with France Telecom, thereby nullifying the approval for the termination agreement made at the company's annual general meeting in 2003.

If the Schleswig court's ruling is made legally valid, "it would mean that the French company unjustifiably canceled the contract for the cooperation in March 2000," Schmid said. "This would have major consequences," he added.

Schmid and his wife Sybille Schmid-Sindram have been making claims against the French telecommunications operator ever since the company backed out of a contract in which it had agreed to finance Mobilcom's third-generation wireless or UMTS network.

France Telecom agreed to incur EUR7 billion in debt from its German partner, as reparation for the terminated contract. But Schmid is demanding further compensation worth billions of euros, because he views France Telecom's retreat as having unfairly disadvantaged Mobilcom.

Mobilcom Chief Executive Eckhard Spoerr told Dow Jones Newswires the company hasn't yet decided how it will deal with the damage claims filed in the name of its shareholders.

"That has to be thought through very thoroughly," he said.

France Telecom couldn't immediately comment on the issue.

The critical question is whether France Telecom was the dominant partner at the time of the agreement. According to stock corporation law, the dominant company must be held responsible if its actions have an adverse impact on the dependent partner.

Schmid said he expects further tailwind, as the Schleswig court states there are indications Mobilcom had become an "ultimately virtually dominated company" by France Telecom and that it was handed a disadvantage in the legal settlement agreement.

Company Web site: http://www.mobilcom.de

-By Stefan Paul Mechnig, Dow Jones Newswires; +49 211 13 87 213; stefan.mechnig@dowjones.com

(END) Dow Jones Newswires "

Posted to the site on 8th February 2006