The Unitech Group plans to drag global communications major Telenor to the Company Law Board (CLB) citing ‘gross mismanagement’ of their joint venture mobile phone operations by the Norwegian telco, a source close to the development said. Unitech also plans to ask the CLB to send an observer to all board meetings of the JV company to ‘ensure that its interests are protected’, the company executive added.
The development marks a new low in the deteriorating relations between both partners, who are also involved in an arbitration process in Singapore. Telenor and Unitech have been involved in a public spat during the last couple of months over several issues related to their JV, including its management and funding.
Telenor has a majority stake of 67.25% in the JV, which offers mobile services in India under the ‘Uninor’ brand, while realty firm Unitech owns the rest.
The source said that Unitech would approach the CLB stressing on the ‘oppressive and malafide actions of Telenor and its executives, especially regarding the decision of the Uninor board to raise Rs.9,000 crore through a rights issue’.
The Punjab and Haryana High Court recently lifted the stay on the rights issue. Prior to that Unitech had obtained a stay in the Gurgaon district court.
It is learnt that Unitech’s petition before the CLB will allege that the Uninor Board’s decision to go in for a rights issue violated the ‘hierarchy of funding incorporated in the company’s Articles of Association’. According to Unitech, the Memorandum of Articles of Uninor states that the company should exhaust all other modes of available funding prior to going in for a rights issue.
The Unitech spokesperson declined to comment.
Telenor’s Group CEO Fredrik Baksaas had recently said that it would look at inducting another partner for its Indian operations, if Unitech ‘does not meet its obligations and participate in the upcoming Rs.8,200 crore rights issue’.
Executives close to Unitech said the primary reason behind the realty firm’s move to approach the CLB stemmed from the Uninor’s decision against availing a Rs 9000 crore loan from SBI. These executives, who did not want to be named, said that SBI, after due diligence, had agreed to fund the expansion plans of Uninor, but this was turned down by Telenor.
Telenor entered India in 2009 when it bought a controlling stake in Unitech Wireless, the telecoms arm of realty firm Unitech Wireless. But Unitech Wireless is one of the companies which has been charge sheeted by the Central Bureau of Investigation in the 2G spectrum scam and its former Chairman Sanjay Chandra is in jail, one of the accused, is in jail.
Unitech’s petition before the CLB may also allege that Telenor was using the wrong interpretation of the Punjab & Haryana high court order. Unitech claims that the HC approval was conditional in nature and depended on the ongoing arbitration in the Singapore court.
Additionally, Unitech will also complain to the CLB that despite objections by representatives on the Uninor board, Telenor had ’caused the company to adopt a ten years’ business plan, which was outright, unilateral, malafide, self-serving, premature and aimed at artificially depressing the valuation of the company’, the executive quoted above said.
