TeliaSonera AB, Sweden’s largest telephone company, may face a class-action suit by the former minority holders of AS Eesti Telekom, who say the state received preferential treatment in the buyout last year.
Asset manager Kawe Kapital, a former shareholder, received promise from other former owners for half the required 300,000 krooni ($24,000) to be deposited for litigation costs, said Kawe partner Kristjan Hanni yesterday. Former holders that were forced to sell shares after a buyout bid say TeliaSonera last September gave Estonia an edge when it committed to pay itself 100 percent of Eesti Telekom’s profit for three years, making it liable to pay a 21 percent dividend tax that effectively gave the state better financial terms than others.
“Minority shareholders were never offered anything corresponding to these tax revenues of about 2 euros per share,” he said in an email interview. “We have a clear reason due to this treatment to try and secure compensation from TeliaSonera in the form of a class action that would correspond to the value of assets taken from us against our will.”
TeliaSonera, which owned 60 percent before making its offer on Aug. 24, bid 3.33 billion kronor ($444 million) in cash for the remaining shares, or 5.94 euros a share for Eesti Telekom. Estonia’s government, which owned 27 percent of Eesti Telekom, last September accepted an improved offer from TeliaSonera that included an extra dividend of 6.99 krooni per share. This helped TeliaSonera exceed the 90 percent threshold for a so-called squeeze-out. The suit would affect about 1,400 shareholders forced to sell shares in the squeeze out.
Total compensation would equal about 2.8 million euros ($3.5 million), assuming a price of 2 euros per share, Hanni said. He expects financial commitments from other former owners topping the full sum of 300,000 krooni on July 20. The legal deadline to deposit the required funds to go ahead with the class-action suit is Aug. 2.
Former owners contributing 1.5 krooni per share for litigation costs would pay lawyers 10 percent of potential compensation, while those not depositing any funds would have to pay 30 percent of any proceeds, according to an agreement with the Sorainen law office.
The case would be the first class-action suit in Estonia related to minority buyouts, after such an option was established in 2006, said Urmas Volens, a specialist counsel with Sorainen, in a phone interview today.
TeliaSonera spokeswoman Irene Krohn said the company “complied with the laws and regulations that apply” and “achieved a very high level of acceptance for the bid, according to an e-mailed response to Bloomberg question. She declined further comment.