Russian Bailiffs to Sell Telenor's Stake in VimpelCom

Russian bailiffs have passed an order to auction off Telenor's shares in Russian mobile network operator, VimpelCom to cover a disputed US$1.7 billion fine. Responding to the news, Telenor said that it has not received any other information from the Bailiff's office than what has been posted on the Bailiff's home page.

According to a separate comment made by the State Property Agency the preparations for a potential sale will take at least two months.

Telenor confirmed that it is confident that the incorrect decision of the Omsk court will eventually be overturned and that it therefore would be very surprising if the shares were sold prior to a final court decision.

Telenor's shares were briefly suspended on the Norway stock exchange when the Russian bailiff announcement was made due to a sharp fall in the share price.

The court hearing itself has been delayed until the end of September after the mysterious litigant, Farimex said that it needed time to study claims made in a US court that it has links with the Alfa Group - which it has denied.

Last summer Farimex initiated a court proceeding against Telenor, VimpelCom and Altimo in a distant court of Khanty-Mansiysk in Western Siberia, Russian Federation. Farimex accused the three companies of having caused losses to VimpelCom by delaying VimpelCom's acquisition of URS. The Khanty-Mansiysk court held Telenor solely liable for VimpelCom's alleged late entry into the Ukrainian mobile market and ordered Telenor to pay VimpelCom US$2.8 billion in damages.

This decision was cancelled by the Omsk court on 29 December 2008. However, on 20 February 2009 the court ruled to hold Telenor liable for US$1.7 billion. The court gave Farimex a writ of execution to claim the amount that resulted in arrest of all Telenor shares in VimpelCom on 11 March 2009. Telenor is appealing the ruling.

The case between Farimex and Telenor has aroused wide-spread, international concern. Roland Nash, Chief of research at Renaissance Capital viewed the case as a test to the creditibily of Russia's legal system and opennes to foreign investment. Russia analyst Christopher Granville views the Farimex vs. Telenor case as even more serious to Russias credibility than earlier legal battles, and judge Gerard E. Lynch, presiding in the New York appeal cases lodged by Telenor over Kyivstar, has critizised Alfa Group's utilisation of remote courts in Western Siberia.

Posted to the site on 19th June 2009