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February 23, 2009

Telenor to appeal against $1.7 billion fine imposed by Russian court

Farimex alleged that Telenor's nominees on the VimpelCom board delayed VimpelCom's acquisition of Ukrainian Radio Systems

By CBR Staff Writer

Norwegian mobile operator Telenor has said it will appeal the decision of the Eighth Arbitrazh Appellate Court in Omsk, Russia, holding Telenor liable for approximately $1.7 billion in damages. 

The Omsk court has heard from the start the claim by Farimex Products, a British Virgin Islands company, against Telenor, in which Farimex alleged that Telenor’s nominees on the VimpelCom board delayed VimpelCom’s acquisition of Ukrainian mobile operator Ukrainian Radio Systems (URS).

The court denied Farimex’s motion to arrest Telenor’s VimpelCom shares, but said that the damage claim can be enforced by both VimpelCom and Farimex.

In its suit, Farimex alleged that Telenor-nominated members of VimpelCom’s board of directors delayed VimpelCom’s 2005 acquisition of URS, a loss-making Ukrainian mobile operator. Telenor says its board members opposed the acquisition because URS was over-valued and had no credible business plan.

Jan Thygesen, executive vice-president and head of  Central and Eastern European operations for Telenor, said: Today’s court decision is a serious violation of Telenor’s lawful rights and interests as a strategic investor in Russia. We will continue to defend our investment in VimpelCom using all legal means available. Since 1998, Telenor has acted in the interests of VimpelCom, and we have repeatedly pointed out that this suit is an illegal attempt to steal Telenor’s investment in Russia.

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