NTT free to sell shares to GTH

By Natasha Gunaratne

After months of legal wrangling on the proposed sale of Sri Lanka Telecom (SLT) shares by Japan's NTT Communications Corporation to Global Telecommunications Holdings NV (GTH), the Supreme Court on Monday terminated the fundamental rights petition filed by the late MP Sripathi Sooriyarachchi, thereby allowing the sale to go through, as long as everything is conducted in a transparent manner. According to a letter on corporate disclosure sent by SLT CEO Shoji Takahashi to the Colombo Stock Exchange on Tuesday, the fundamental rights application was concluded and the stay order was vacated, permitting the parties to proceed with the sale of shares subject to certain conditions.

The letter stated that the government of Sri Lanka should not be a party to the sale and the proposed shareholders agreement between the prospective investor and the government should not be proceeded with. The letter also stated that the shareholders agreement currently in force will terminate with the sale of shares by NTT in its entirety to GTH and if in the event a fresh management agreement is contemplated, it should be concluded with transparency and proper external disclosures.

According to an attorney close to the case who spoke to The Sunday Times FT, the petitioner did not want a new shareholders agreement to be entered into between GTH and the government and wanted the existing agreement to continue. A motion was filed on 19 February 2008 by the attorneys for NTT and GTH which addressed the concerns of the Court, having to do with the shareholder's agreement and proposed the above conditions which were accepted by the petitioner. If a new shareholders agreement is entered into between GTH and the government, the attorney said that it will have to be done in a transparent manner and given public notice.

According to the terms of the current shareholders agreement, if NTT's stake in SLT falls below 10 percent, the agreement ceases to exist. If NTT goes ahead and sells off 25.3 percent of its total 35.2 percent SLT stake as was originally proposed, it will still retain just over 10 percent of shares.

An industry source told The Sunday Times FT that NTT will be issuing a statement shortly on what it intends to do, adding that the decision made by the Supreme Court was not a surprise as the petitioner presented a very weak case.

He said if a new shareholder's agreement is signed, all details have to be divulged to the Colombo Stock Exchange since SLT is a publicly listed company.