Unitech objects to Uninor's FIPB proposal on rights issue

Company says it never agreed to its Norwegian partner's move to raise funds

Realty firm Unitech has shot off a letter to FIPB objecting to its telecom partner Uninor's proposal to raise Rs 1,200 crore through a rights issue, saying it had never agreed to the move as was being claimed by Uninor.

Unitech Wireless - the joint venture of Unitech Ltd and Norway's Telenor which operate under Uninor brand, had applied to Foreign Investment Promotion Board (FIPB) for permission to raise funds to meet operational and capital expenditure.

Unitech, which holds 32.75% stake in Uninor, said that the telecom firm misrepresented facts that its nominee directors on the board of the JV approved the proposal for rights offer in its letter to FIPB.

"We note that the letter (from Uninor seeking FIPB nod) stated that the nominee directors appointed by Unitech Ltd and its associates on the board of Uninor have also consented to the rights offer in the Board meeting of May 23, 2012," it said. "This is wrong and a misrepresentation of facts."

Unitech said its directors on Uninor have already written to the company pointing that "the issue of rights offer was not even an agenda item in the meeting dated May 23."

"There was only some discussion on the rights issue. No decision was or could have been made especially since the proposed rights issue is a matter of arbitration between the shareholders," it said.

The realty firm said that matter of rights issue is pending before arbitration tribunal and next date for hearing in the matter is on September 24 in Singapore.

Unitech alleged that the proposal of rights issue is probably an attempt by its Norwegian partner Telenor in the JV to introduce a new partner in an indirect manner.

"Telenor has made its intent to continue the telecom business in India with a new partner of its choice clear. Telenor's FIPB proposal should be taken up only after the credentials of this new partner," Unitech alleged.

The realty firm said that shareholders agreement of Uninor contains gives priority of funding business by way of project finance and option of 'rights issue' come later.

"Telenor breached the hierarchy by not fully exploring the possibility of obtaining long term project finance and indeed, when at one point of time when project finance was available through State Bank of India, it was deliberately not taken," Unitech letter said.

Comments of Uninor and Telenor were not received till the time this report was filed.