By R. Jai Krishna
NEW DELHI--India's Company Law Board on Thursday asked Unitech
Wireless Ltd., majority owned by Norway's Telenor ASA (TEL.OS), to
not go ahead with a proposed auction of its assets on a petition
filed by its local shareholder, Unitech Ltd. (507878.BY).
Telenor owns 67% of Unitech Wireless, while Indian property
developer Unitech holds the rest.
The partnership ran into trouble after the Supreme Court of
India in February canceled as many as 122 telecom licenses,
including the 22 Unitech Wireless held, citing irregularities in
its 2008 allotment. Telenor bought the stake in Unitech Wireless
after the Indian company got the licenses.
Telenor now wants Unitech to exit the venture, but the partners
are divided over the valuation of the assets.
Unitech Wireless invited bids for the auction last week,
ignoring opposition from Unitech. This led Unitech to approach the
Company Law Board.
Telenor and Unitech Wireless, which offers mobile services in
India under the Uninor brand, say an open auction will remove any
dispute around the valuation of the business. The Norwegian company
said it would form another Indian company and bid for the assets in
the proposed auction.
The Company Law Board stayed the auction plan last Friday and
posted the case for hearing on Wednesday. On Monday the Delhi High
Court allowed Unitech Wireless to proceed with accepting initial
bids from prospective buyers until Wednesday.
In its order, made on Thursday, the Company Law Board said the
intent and purpose of the auction plan were "mala fide as it
intends to completely oust" Unitech, the minority shareholder.
"The auction notice, if given effect to, would result in
complete dissipation of the assets of Uninor and render it a shell
company without any business or assets," Justice D.R. Deshmukh, the
board's chairman, wrote in the order, a copy of which Dow Jones
Newswires has seen.
Unitech Wireless will now need approval from a high court or the
Supreme Court to proceed with the auction program.
"Since the CLB (Company Law Board) order has now been
pronounced, we are able to comprehensively move our arguments
toward Uninor's assets auctions to the higher courts," Unitech
Wireless said in a statement.
Telenor and Unitech didn't offer comments immediately.
The case will be taken up for final hearing on Nov. 19 and 20,
the order showed.
Write to R. Jai Krishna at krishna.jai@dowjones.com
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