Telefonica to suit Millicom for not acquiring its operations in Costa Rica

Telefonica announced that it will file a lawsuit against Millicom International Cellular (which operates in Latin America under the ‘Tigo’ brand). According to the Spanish company, the decision is due to the fact that Tigo left the agreement to acquire its share capital in Costa Rica unfinished. This was confirmed in Madrid, in a document sent to the National Securities Market Commission (CNMV) of Spain, where Telefonica is headquartered.

Telefonica reported in the document that it will go to Courts in New York to make Millicom honor the agreement, valued at USD 570 million and ran on February 20th, 2019, for the sale of the entire share capital of Telefonica de Costa Rica TC , SA. ‘The lawsuit will be filed as soon as said Courts allow the initiation of new non-emergency actions’, reports the document sent to the CNMV.

In it, Telefonica reports that, once the pertinent regulatory authorizations have been obtained and the conditions established in the agreement to implement the sale have been completed, it formally requested Millicom to run de agreement and close the transaction. According to Telefonica, Millicom ‘expressed its negative decision to proceed with the closing, constituting a breach of the terms and conditions established in the previously mentioned agreement’. In the legal actions to be initiated, Telefonica requires Millicom to fulfill with what is agreed  and a monetary compensation for all damages that the breach could cause.

From Millicom they expressed themselves about the initiative of Telefonica through a statement, in which it ‘refutes the Spanish company’s public communications alleging that the conditions to closing the Share Purchase Agreement (SPA) for the acquisition of Telefónica’s operating subsidiary in Costa Rica have been met. According to Millicom, it ‘entered into the SPA on that date to acquire Telefonica’s Costa Rica mobile business subject to customary closing conditions, which included the issuance of required regulatory approvals, certain of which have not yet been issued’. In addition, it claims that in the event that the pending regulatory approvals for the transaction are not issued by May 1, 2020, it intends to terminate the SPA in accordance with the terms of the agreement.

According to the Costa Rican newspaper La Nacion’s web version, the country’s Government confirmed that both companies already had all the authorizations to complete the sale process, including the authorization of the Commission for the Promotion of Competition and the Telecommunications Superintendency (Sutel).