In one of the first signs of shareholder activism in Eastern Europe, US law firm Squire Sanders & Dempsey is fighting in the Czech courts to stop a shareholders' challenge to the region's largest ever privatisation deal.
Squires Prague partner Richard Surrey said the legal challenge to the $1.3 billion privatisation of telecomms company SPT, which Squires helped broker, is part of a growing new trend for shareholder activism in Eastern Europe.
But he dismissed the challenge from computer systems consultant Martin Mossinger, who has five shares in SPT, as “frivolous” and said that it was unlikely to succeed on appeal. He added that even if it did, it would not derail the privatisation.
The Czech government originally sold 26 per cent of SPT to small shareholders and investment funds through a voucher privatisation. Then in spring last year Squires advised SPT and the Czech government in selecting a strategic foreign partner, Telsource, which bought a 27 per cent stake in the firm.
Mossinger objects to Telsource's entry into the purchase and has won a court action which declares that a decision to bring in the company is invalid. Squires has appealed the court's decision for SPT.
Surrey said: “He won't win on appeal. He's arguing about a dating error on the power of attorney document. He says there wasn't a quorum at the crucial meeting because of a dating error. He says its going to invalidate the privatisation but even if his case is upheld it will just mean a couple of new appointments to the board.”
He added: “If nothing else, this case demonstrates the independence of the Czech courts, which is a very healthy development.