"Econet Case Will Not Derail Zain Africa Deal"

Kuwait's Zain Group is not concerned that a lawsuit filed by South Africa's Econet Wireless pertaining to the company's 2006 purchase of Nigerian operator Vee Networks (now Zain Nigeria) will derail plans to sell a 46% stake in the group to Indian investors, Bloomberg reports, citing Kuwaiti daily Al-Rai. 'The lawsuit is old and dates back to before 2006,' Zain CEO Saad al- Barrak told the newspaper, before adding that Econet had lost similar lawsuits filed against Zain in British courts over the last four years.

Econet claims that its right of first refusal over the stake was breached when Zain bought out the Nigerian cellco in May 2006, and has said it will continue to pursue arbitration proceedings. Econet has also applied for interim measures to prevent Zain from selling, transferring, disposing of, dealing with or otherwise encumbering the disputed stake until the matter is resolved.

The blocking could disrupt plans by the Al-Kharafi group, which holds an indirect 10.8% stake in Zain, and its National Investments Company to sell a total 46% stake in Zain Group valued at USD13.7 billion to a consortium of Indian and Malaysian investors, including BSNL, MTNL and Vavasi Telegence.

Econet Continues To Dispute Zain Nigeria Sale

South African-based telecoms group Econet is continuing to dispute the 2006 purchase of a 65% stake in Vee Networks by Celtel International, which has since been wholly acquired by Zain Group, Reuters reports.

 

Econet was a founding shareholder in Vee Networks, which has since been renamed under the Zain Nigeria banner. The South African group claims that its right of first refusal over the stake was breached in May 2006, when its Nigerian partners sold their shares to Zain, and has said it is sticking to the pursuit of arbitration proceedings.

 

Econet said it has appealed to legal authorities, including an international tribunal working under the United Nations, for the transaction to be unwound. It has applied for interim measures to prevent Zain from selling, transferring, disposing of, dealing with or otherwise encumbering the disputed stake until the matter is resolved.

Econet Challenges Zain Takeover of V-Mobile

The appointment of the final member of an international tribunal to review the sale of V-Mobile Nigeria to Middle East headquartered mobile phone operator Zain, has this week been confirmed by the Chief Justice of the Nigerian Federal High Court.
This comes despite objections by founding shareholder Econet Wireless. Econet claimed its pre-emption rights were breached when the sale was concluded.
In a statement, Econet said that it had been notified of the appointment of the panel and that the tribunal was intending to commence hearings as early as the end of this month.
Econet Wireless was the operator in a consortium of investors that launched Nigeria's first GSM mobile network operation in 2001. The network has grown into country's second largest operator, with about 20 million customers.
Econet claimed that its pre-emption rights in respect of shares had been breached when Econet's predominantly Nigerian partners decided to sell their shares in V-Mobile to Zain in 2006. Consequently, Econet tried to prevent the sale of the shares to Zain through the UK courts, but the judge ruled that the UK was not the appropriate place for such legal proceedings as the matter was more closely connected with Nigeria. Since then, Econet has commenced ongoing legal proceedings in the Nigerian courts.
The tribunal will undertake the arbitration using the rules of the United Nations Commission on International Trade Law, known as UNCITRAL. Arbitration proceedings normally take approximately 18 months to conclude.
In a yet further arbitration concerning the disputed sale, a London Court of International Arbitration (LCIA) tribunal has ruled that Zain was under an obligation, if it involved itself in the Econet transaction, to act in good faith so as to ensure the minimum conflict with Econet possible. This decision was recently introduced into the Nigerian proceedings and will be a key document in Econet's claim in the Nigerian courts going forward.
Meanwhile, Econet has also been pursuing its battle through the Dutch courts, where Zain's African operations had its headquarters at the time of the sale.