Kuwaiti court hears lawsuit by leading Zain investor objecting to planned sale of a majority stake in the telco to Etisalat.
Zain investor in court to block sale to Etisalat
KUWAIT CITY // A Kuwaiti court on Wednesday heard an urgent lawsuit by a leading Zain telecom investor objecting to a planned sale of a majority stake to the UAE’s Etisalat, a court clerk said.
The commercial court made no verdict but set December 15 for the next hearing into the deal estimated at close to $12 billion, the clerk said.
The suit, filed by al Fawares Holding Co., which owns about a five per cent stake in Zain, calls for Zain to be prevented from opening its books for due diligence to United Arab Emirates-based Etisalat and from selling its Saudi unit.
Zain's board of directors last month decided to open the firm's books to Etisalat, based on a request by al Khorafi Group, which holds an estimated 20 per cent in direct and indirect ownership in Kuwait's biggest mobile operator.
Etisalat wants to sell off Zain Saudi Arabia because it runs Mobily telecom in the kingdom.
Al Khorafi Group said in an announcement on Wednesday that it will call on Zain board of directors to hold a meeting next week to approve the start of procedures to sell Zain Saudi Arabia.
Etisalat, the biggest telecoms provider in the region by market value, said last month it had signed a preliminary agreement with Khorafi to buy 51 per cent of Zain shares traded on the Kuwait Stock Exchange at 1.7 dinars ($6.10) per share.
Conditions it listed include the completion of satisfactory due diligence, obtaining all applicable regulatory approvals and that there should be no material adverse change in Zain's business, financial or regulatory affairs.
Due diligence and the other work required to reach definitive agreements would take a number of weeks, while the transaction is unlikely to close before the end of the first quarter of 2011, Etisalat said.
In its statement on November 3, Etisalat said its purchase proposal would terminate unless the parties have entered into "definitive transaction documents" by January 15.