KUWAIT, Dec 5 (Reuters) - Al Fawares Holding, a Zain shareholder unhappy with the telecom carrier's sale process, threatened to sue potential buyers of the firm's Saudi unit in an escalation of its opposition to the deal with the UAE's Etisalat.
Al Fawares, which owns a 4.5 percent stake in Zain, said in an advertisement in Kuwaiti daily al-Watan on Sunday that it may ask for Zain to be put into receivership unless the deal is made more transparent.
Such a move, which would require convincing a court the situation endangered the company, was unlikely to succeed, said a Kuwaiti lawyer.
"My personal opinion in this case is that the company is not in danger especially as it is in good (financial) condition," he said, speaking on condition of anonymity.
Al Fawares has filed a lawsuit to halt the due diligence in the planned sale of a 46-percent Zain stake to Etisalat. A hearing has been set for Wednesday.
The company says Zain's board should not have opened its books to Etisalat without board members seeing the offer.
Legal action could delay the $12 billion deal, or potentially scupper it. Etisalat has said any deal could fail if definitive transaction documents are not signed by Jan. 15, 2011.
On Sunday, Al Fawares said it informed banks involved in the deal, including National Bank of Kuwait and UBS, that it will go to court against "whoever tries to buy or sell Zain Saudi 7030.SE."
"Al Fawares confirms that continued violations ... on the assets of the company and the rights of the board of directors ... might push Al Fawares or other shareholders to go to court and ask for placing the company into receivership unless things are done right, transparency is practised and any attempts to sell Zain Saudi or any other asset of the company are halted," the ad said.
A Zain spokesman said management does not comment on issues involving shareholders.
Etisalat officials were not immediately available for comment.
Zain is selling its position in Zain Saudi as a condition of the Etisalat deal. Both Etisalat and Zain have units in Saudi Arabia and compete for market share there.
Kharafi Group, one of Zain's major shareholders, has said it gathered enough approvals from shareholders to tender the stake to Etisalat's.
Some Kuwaiti analysts have said the dispute centres on commission fees being earned by Kharafi Group, as the arranger of the deal through its brokerage unit, National Investments Co.
"Kharafi Group ... will earn a premium for gathering the shares, and could earn up to 200 million dinars ($712.7 million)" Hajjaj BuKhadour, an independent Kuwaiti analyst, told Reuters. "Others found this unfair and reacted this way to reach an agreement over that amount."
Naser al-Nafisi, general manager of Al Joman Center for Economic Consultancy in Kuwait, said the legal action was a "serious challenge" to the deal.
"There is some logic to their point of view," he said adding board members have the right to see the agreement with Etisalat.
He said Al Fawares is threatening more than one lawsuit to make sure that "if one doesn't work, the other will."
Zain shares closed up 4.4 percent on Sunday.
Separately, UAE Economy Minister Sultan bin Saeed al-Mansouri said in remarks published on Sunday that the Abu Dhabi government supports the deal. Etisalat is 60-percent owned by the UAE government.
He told Kuwait's al-Qabas daily Zain was a "distinguished company with great geographic presence which could help us make up for some of Etisalat's gaps in certain geographic locations."
(C) Reuters
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