US Federal Court Denies Alfa's Motion to Amend Contempt Order Reconfirms Order Requiring Storm to Deposit Kyivstar Shares with Court

The four Alfa companies were held in contempt for their failure to obey the Court's 2 November 2007 court order upholding Telenor's arbitration award against Alfa Group subsidiary Storm. In its 19 November Contempt Order, the Court held all four companies in contempt, imposed escalating fines beginning at US$100,000 per day, and ordered Storm to sell its shares in Ukrainian mobile operator Kyivstar within 90 days, unless within that period, Alfa has properly divested its shareholdings in excess of 5% of Turkcell and Ukrainian High Technologies.

The Court's 19 November Contempt Order gave Storm a ten day grace period-expiring on 4 December-to comply, before the imposition of the fines. The four Alfa companies requested the Court to further delay the imposition of contempt sanctions until 16 December, when Kyivstar's next shareholders meeting is scheduled to take place. Judge Gerard E. Lynch denied this request, stating in his decision that "the Court was under no obligation to provide Storm any grace period at all before imposing contempt sanctions. The Final Award was confirmed by this Court over a year ago, and Storm's obligation to comply commenced then. Its failure to take steps to comply during that time does not entitle it to further extensions now that it is threatened with contempt sanctions." The judge said that if Storm complied with the requirements of the final arbitration award on 16 December, it could apply to the Court for remittance of its accrued fines, and that such an application would be favorably received. Although the Alfa companies remain obligated to pay the fines, the judge instructed Telenor not to take steps to collect the fines until 17 December.

The four Alfa companies also requested that the Court amend the Contempt Order to remove the requirement that Storm deposit its Kyivstar shares with the Clerk of the Court on the basis that the shares are in electronic, book-entry form. Judge Lynch denied this request, stating that "Storm's argument about the electronic nature of its shares is frivolous."

"We are pleased the Court denied Alfa's motion," said Telenor's Executive Vice President and Head of Central and Eastern Europe, Jan Edvard Thygesen. "We look forward to Alfa depositing its Kyivstar shares with the Court, and hope that at long last Alfa will begin to comply with its legal and contractual obligations."

A complete copy of the Court's decision can be found at: http://www.telenor.com/press/docs/2008/sdny03.12.08-decision.pdf  

Further information:
Dag Melgaard, Vice President Group Communications, Telenor ASA
tel: +47 901 92 000
e-mail: dag.melgaard@telenor.com  

Anna Ivanova-Galitsina, PR and Communications Director, Telenor Russia
tel: +7 495 937 9588
e-mail: anna.galitsina@telenor.com

Anastasiya Gogoleva, PR and Communications Director, Telenor Ukraine
tel: + 380674676666
e-mail: anastasiya.gogoleva@telenor.com