Armenian Court Orders Seizure of ArmenTel Shares

* Shares are valued at more than $140 Million. Shares gave Greek Telephone Company 90-percent ownership of ArmenTel.

LOS ANGELES (Business Wire)–The Government of Armenia announced Wednesday that it had obtained a court order against Hellenic Telecommunications Organization–the Greek telephone company–seizing the shares held by OTE in ArmenTel–the Armenian telephone company.

The court order results from a lawsuit filed in Yerevan by the Government’s Ministry of State Revenues–to collect back profit taxes (capital gains taxes) owed as a result of the sale in March 1998 of the majority interest in ArmenTel to OTE by the Government and Trans-World Telecom–Ltd.

The Government filed a complaint in court on June 25–to collect the back taxes. A hearing on that complaint was to be held yesterday. However–OTE appeared in Court and asked for an extension of time to respond to the Government’s claims–which the court granted until July 26–1999.

The other defendants–Trans-World Telecom and its sister company Trans-World Telecom Holdings Ltd.–offered written evidence in defense but this evidence was rejected by the Court at this time because the material was in English and not in Armenian. The Trans-World Telecom companies are tax devices controlled by Barry Hon–an Orange County–Calif. real estate developer.

"We are pleased that the defendants decided to appear before the Court because we believe that a full and fair hearing of this matter will clearly demonstrate the merits of the Government’s claim," said Jay Mulkeen–a litigation partner in the law firm of Manatt–Phelps & Phillips which represents the Government of Armenia.

"It would have been a mistake for the defendants to ignore this matter because the Government will pursue collection of these taxes vigorously with all legitimate means at its disposal–including a sale of the shares that were seized today by order of the Court," said Mulkeen.

The Government expects that on July 26–1999–when the court convenes again to hear the matter–the decision will be to uphold the merits of the tax claim. The Government then expects to be able to enforce the resulting judgment anywhere in the world against these defendants and their assets.

Mulkeen and Harold Reichwald of Los Angeles-based Manatt–Phelps & Phillips–have represented the Government of Armenia in this matter since June 1999.

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