Japan’s NTT Docomo drags Tata Sons to arbitration on stake sale
6 Jan 2015 11:17 PM GMT
Japanese telecom giant NTT Docomo has dragged Tatas to an arbitration court, alleging that the Indian firm failed to honour commitment to buy its Rs 7,250 crore stake in their joint venture Tata Teleservices Ltd. Docomo had in April last year announced plans to exit the joint venture by selling its 26.5 per cent stake. Tata Sons by virtue of their first right of refusal agreed to buy the Japanese company out as per the shareholders agreement.
However, the deal has not been concluded over the differences between the two sides and Docomo said it has filed for arbitration with Tata Sons on January 3, 2015 with London Court of International Arbitration.
"...Pursuant to the shareholders agreement, Docomo submitted its request for arbitration to ensure that its right be exercised after Tata Sons had failed to fulfill its obligation, despite Docomo's repeated negotiations with Tata Sons regarding the sale of its entire stake in TTSL," NTT Docomo said in a statement.
It further said: "Under the terms of the shareholder agreement between it, TTSL and Tata Sons, Docomo exercised on July 7, 2014 its right (option) to request that a suitable buyer be found to purchase its TTSL shares for 50 per cent of the acquired price, amounting to Rs 72.5 billion (or 125.4 billion yen), or a fair market price, whichever is higher." When contacted, a Tata Sons spokesperson said,"Yes, we have learnt that Docomo has filed for arbitration. From the outset, Tata Sons has been committed to honouring its obligations to Docomo, and has taken every possible step keeping in mind the interests of all stakeholders and in accordance with law."
Tata Sons said it has made the necessary application to the Reserve Bank of India, and is awaiting a response.
However, the deal has not been concluded over the differences between the two sides and Docomo said it has filed for arbitration with Tata Sons on January 3, 2015 with London Court of International Arbitration.
"...Pursuant to the shareholders agreement, Docomo submitted its request for arbitration to ensure that its right be exercised after Tata Sons had failed to fulfill its obligation, despite Docomo's repeated negotiations with Tata Sons regarding the sale of its entire stake in TTSL," NTT Docomo said in a statement.
It further said: "Under the terms of the shareholder agreement between it, TTSL and Tata Sons, Docomo exercised on July 7, 2014 its right (option) to request that a suitable buyer be found to purchase its TTSL shares for 50 per cent of the acquired price, amounting to Rs 72.5 billion (or 125.4 billion yen), or a fair market price, whichever is higher." When contacted, a Tata Sons spokesperson said,"Yes, we have learnt that Docomo has filed for arbitration. From the outset, Tata Sons has been committed to honouring its obligations to Docomo, and has taken every possible step keeping in mind the interests of all stakeholders and in accordance with law."
Tata Sons said it has made the necessary application to the Reserve Bank of India, and is awaiting a response.
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