VimpelCom Ltd has been forced to step-up pressure on its shareholders to vote for its planned US$6 billion merger with Wind Telecom after an independent advisory body called for VimpelCom shareholders to reject plans to issue new shares to fund the deal. “Given the corporate governance concerns, lacklustre market reaction, and ambiguous economic gains, the proposed acquisition of Wind Telecom does not appear to be in the best interest of shareholders,” noted Institutional Shareholders Services (ISS), a so-called ‘proxy advisor.’ Its position prompted VimpelCom to issue a statement yesterday reaffirming that the company’s board recommends that shareholders vote in favour of the deal when it is discussed at a Special General Meeting on 17 March. In contrast to the ISS position, VimpelCom cited another proxy advisory firm – Glass Lewis & Co. – which has judged that “the company should be provided the flexibility to use its equity in a manner that could provide funding for its operations and enhance shareholder value.”

Meanwhile, VimpelCom continues to face opposition to the deal from one of its main shareholders, Telenor. Last month, Telenor petitioned the Commercial Court in London for an injunction, which – if the deal goes ahead – will require VimpelCom to issue to Telenor its pre-emptive rights shares at the same time that VimpelCom issues shares to the Wind Telecom shareholders. The court is scheduled to decide whether to grant the injunction this week. Telenor – which stands to see its shareholding in VimpelCom significantly diluted as a result of the deal – has argued that the merger is “not in the best interests of VimpelCom shareholders.” VimpelCom’s 17 March meeting aims to approve the issuance of up to 325,639,827 VimpelCom common shares and 305,000,000 convertible preferred shares and the increase of VimpelCom’s authorised share capital needed to complete the transaction.