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. Last Updated: 07/27/2016

Alfa Says MegaFon Dispute Resolved

MTAlfa's telecoms arm, Altimo, and IPOC have agreed to drop all legal claims against each other, Altimo said Friday.
Altimo, the telecoms investment vehicle of billionaire Mikhail Fridman, said Friday that it had resolved a long-running dispute over its stake in the country's third-largest mobile operator, MegaFon.

The stake has been disputed by IPOC, a Bermuda-based fund, since August 2003, when Altimo bought a 25.1 percent stake in MegaFon for $295 million.

IPOC, which now owns a minority stake in MegaFon, said it agreed to buy the 25.1 percent stake before it was acquired by Altimo. IPOC has been fighting the Altimo-MegaFon deal in court for nearly four years, complicating MegaFon's plans for an initial public offering.

"The legitimate ownership rights of Altimo for 25.1 percent of MegaFon shares will not be challenged by any of the parties," Altimo said in a statement Friday.

"It's another important step in Altimo's firm strategy toward the resolution of all remaining disputed issues still existing between the shareholders of our investee companies," Altimo chief executive Alexei Reznikovich said in the statement.

Neither IPOC president Michael North, nor its owner, Danish lawyer Jeffrey Galmond, was available for comment Friday when contacted at their offices in Moscow.

The High Court in Bermuda on Thursday validated a master settlement agreement between IPOC and LV Finance, ending global litigation and arbitration proceedings over the stake, Justin Michaelson, a lawyer for LV Finance, said in a statement Friday.

IPOC had said it gained rights to the MegaFon stake by signing two options agreements with LV Finance, the previous owner, in 2001. Alfa acquired the stake in 2003. IPOC started arbitration proceedings that year, saying LV Finance's then-chief executive, Leonid Rozhetskin, and Fridman colluded in an attempt to defraud IPOC of the stake.

The settlement ends a dispute involving proceedings in Zurich and Geneva and related actions in Bermuda, the British Virgin Islands and other jurisdictions begun in September 2003.

A Zurich-based arbitration tribunal concluded in May 2006 that IT and Communications Minister Leonid Reiman was the beneficial owner of IPOC. Reiman has repeatedly denied the connection to IPOC.

MegaFon spokeswoman Marina Belasheva said the company was aware of the agreement between the shareholders but declined to comment further.

Altimo said the parties had agreed to end all court actions and renounce all legal claims against each other.

Other major shareholders in MegaFon are Sweden's TeliaSonera and telecoms holding Telecominvest.

The dispute resolution could help Altimo go ahead with a possible cash-and-stock deal to swap its MegaFon stake for a minority stake in TeliaSonera, which has long sought control of MegaFon.

Altimo's parent company, Alfa, has been locked in a legal dispute with Norway's Telenor over the direction of VimpelCom, Russia's No. 2 mobile operator, in which both have large stakes. Telenor has been against VimpelCom's expansion into Ukraine by acquiring Ukrainian RadioSystems, a mobile firm competing with Telenor-controlled Kyivstar. Telenor has repeatedly said it wants a "divorce" from Alfa.

Analysts said the deal could also offer a path to resolving the dispute between Alfa and Telenor.

Reuters, Bloomberg