Telenor Wins New York Arbitration against Alfa - Alfa Ordered to Sell Kyivstar Shares or Divest Itself of Competing Assets



    FORNEBU, NORWAY & KYIV, UKRAINE, August 1 /CNW/ - Telenor has today won a
New York arbitration proceeding against Alfa Group subsidiary Storm LLC in
connection with Storm's violations of the Shareholders Agreement relating to
the parties' joint investment in Ukrainian mobile operator Kyivstar G.S.M.
Among other things, the arbitration tribunal has ordered Alfa to sell its
Kyivstar shares within 120 days to an unaffiliated entity or divest itself of
its holdings in competing Ukrainian wireless operators Turkcell and Ukrainian
High Technologies above 5%.

    The three-member arbitration tribunal today issued an arbitration award
which held that Alfa subsidiary Storm has breached and continues to breach the
Kyivstar Shareholders Agreement by:

    --  failing to appoint candidates for election to the Kyivstar Board and
failing to cause Storm-nominated Board members to attend Board meetings;

    --  failing to attend Kyivstar shareholders meetings;

    --  owning or controlling, directly or indirectly through affiliates,
more than 5% of the shares of Turkcell and Ukrainian High Technologies, which
are competing wireless telecom operators in Ukraine; and

    --  by failing to settle any and all disputes relating to the Kyivstar
Shareholders Agreement by arbitration.

    The tribunal's award orders Alfa subsidiary Storm to (a) organize its
Kyivstar shareholding so that it can nominate four candidates for election to
the Kyivstar Board, (b) take all steps necessary to elect its candidates to
the Kyivstar Board and ensure they attend all future Kyivstar Board meetings
and participate in good faith in the direction and management of Kyivstar's
business, (c) attend all Kyivstar shareholders meetings, (d) take steps to
cause Kyivstar's charter to be amended to conform to applicable Ukrainian law
and the Kyivstar Shareholders Agreement, and (e) within 120 days, sell its
Kyivstar shares to a person other than a Storm affiliate unless prior to that
time Storm and its affiliates divest their shareholdings in Turkcell and
Ukrainian High Technologies that exceed 5%.

    In addition, the tribunal has enjoined Storm and anyone acting in concert
with it from (i) pursuing any litigation in Ukraine relating in any way to the
Kyivstar Shareholders Agreement, including any existing litigation, (ii)
attempting to enforce certain Ukrainian court orders and (iii) taking any
action to prevent Telenor and Ernst & Young from exercising their rights under
the Kyivstar Shareholders Agreement or other agreements with Kyivstar

    Telenor commenced the arbitration proceeding, which is governed by the
UNCITRAL (United Nations Commission on International Trade Law) arbitration
rules, in February 2006. Both Telenor and Alfa had agreed in the Kyivstar
Shareholders Agreement to resolve any disputes in such an arbitration
proceeding.

    "We are delighted with this outcome," said Telenor Executive Vice
President and Head of Central and Eastern Europe, Jan Edvard Thygesen. "Alfa
began violating the Kyivstar Shareholders Agreement just over one year after
signing it. Our sole objective in bringing this proceeding has been to defend
our investment in Kyivstar and our rights under the Shareholders Agreement,
force Alfa to comply with the agreement it signed. We are particularly pleased
that the tribunal has ordered Alfa to divest itself of its interests in
competing Ukrainian mobile operators or sell its shares in Kyivstar within 120
days, and has ordered Alfa to stop interfering with Kyivstar's ability to have
its financial statements audited by Ernst & Young. The tribunal's award marks
the beginning of the restoration of corporate governance in Kyivstar."

    Telenor also announced it has applied to the United States District Court
for the Southern District of New York to confirm the arbitration award so that
Telenor can begin to enforce it against Alfa. "We will seek to enforce this
award wherever Alfa has assets, including in Ukraine," said Thygesen. "We are
confident Ukraine will comply with its international treaty obligations and
its own laws concerning enforcement of such arbitration awards."

    Telenor is the majority owner of Kyivstar, holding 56.5% of the shares,
while Storm holds a 43.5% interest.




For further information:

For further information: Telenor ASA Dag Melgaard, +47 901 92 000 Vice
President Corporate Communications dag.melgaard@telenor.com OR Telenor Russia
AS Anna Ivanova-Galitsina, +7903 680 0033 PR and Communications Director
anna.galitsina@telenor.com OR Telenor Ukraine Anastasiya Sosevych, +
380674676666 PR and Communications Director anastasiya.sosevych@telenor.com OR
Orrick, Herrington & Sutcliffe LLP Eileen O'Connor, +1 202-339-8463 mobile +1
202-997-1234 Counsel emoconnor@orrick.com

Organization Profile

TELENOR

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890