UPDATE 2-Telenor-Alfa peace gets backing, suit dropped

Fri Apr 16, 2010 5:28am EDT

* Vimpelcom/Kyivstar merger backed by minority shareholders

* Offer expected to clear 95 pct acceptance threshold

* Farimex drops court case inhibiting merger deal

* Telenor shares up 3.52 percent

(Releads, adds detail, Telenor shares)

By Maria Kiselyova and Wojciech Moskwa

MOSCOW/OSLO, April 16 (Reuters) - A high-profile peace accord between Norway's Telenor (TEL.OL) and Russia's Alfa cleared two big hurdles on Friday as smaller shareholders backed their asset merger plan and a lawsuit hampering the deal was dropped.

Telenor and Alfa Group -- business empire of Russian tycoon Mikhail Fridman -- decided late last year to merge their holdings in Vimpelcom VIP.N, Russia's No.2 mobile operator, and Ukraine's Kyivstar into New-York listed company Vimpelcom Ltd to end a long-running corporate battle. [ID:nL5637811]

The deal hinged on the acceptance by at least 95 percent of Vimpelcom's shareholders, suspension of all legal actions against Telenor and regulatory approvals.

Farimex, an obscure Vimpelcom shareholder, on Friday dropped its $1.7 billion lawsuit against Telenor in a Siberian court.

Also on Friday, Vimpelcom Ltd said its exchange offer to holders of Vimpelcom's New-York listed American Depositary Shares received "overwhelming support", ensuring at least a 97 percent acceptance with the Russian part of the offer ongoing.

"We are very close to closing this deal, provided that the Farimex issue is settled at no cost to us and the closing of the Russian part of the offer on April 20," Telenor spokesman Dag Melgaard said. [ID:nOSN004376]

Siberian courts had ruled in favour of Farimex and Telenor's stake in Vimpelcom has been seized by Russian bailiffs because the Norwegian company refused to pay the fine. [ID:nLU48993]

Farimex claimed that Telenor inhibited Vimpelcom's timely expansion into Ukraine, where it would compete against Kyivstar, and therefore hurt the Russian operator. Telenor has long said that the case against it was without merit.

"We decided to withdraw the suit as there has been a resolution," Farimex lawyer Dmitry Chyorny told Reuters.

Telenor's shares rose 3.52 percent by 0814 GMT.

Telenor said it awaited a decision by Russian bailiffs to release its Vimpelcom shares and cancel proceedings against it.

"This was very important for Telenor," said Tore Toenseth, an analyst at Argo Securities in Oslo. "The political and operational risk that Telenor faces in Russia has been considerably reduced."

Vimpelcom Ltd depositary receipts will begin trading on Friday on the New York stock exchange on a "when-issued" basis under the VIP.WI ticker. Regular trading of the stock is expected to start on April 22, Vimpelcom Ltd said. (With additional reporting by Joergen Frich; Editing by David Cowell)