Nokia offers $369 mln deposit to unfreeze Indian assets

Reuters

HELSINKI, Dec 9 (Reuters) - Nokia has offered topay a 270 million euro ($369 million) deposit to Indianauthorities to unfreeze assets in a tax dispute, according tosources familiar with the matter.

The Finnish firm has been trying to free up the assets,particularly its Chennai factory which is one of its biggestphone-making plants, ahead of the sale of its mobile phonebusiness to Microsoft.

The offer comes on top of an earlier agreement to pay around85 million euros, although Nokia hopes to eventually retrievethe payments if the tax dispute is resolved in its favour, oneof the sources said on Monday.

The combined payment would exceed the income tax bill of20.8 billion rupees ($338 million) demanded by local authoritiesin one of several tax disagreements involving foreign companiesin India.

While Nokia has said it does not expect the dispute toaffect its 5.4 billion euros deal with Microsoft, which isexpected to close in the first quarter of 2014, a lengthy assetfreeze could complicate matters by preventing the transfer ofownership in the Chennai plant.

An asset freeze would allow the facility to operate as usualbut prevent a change of ownership. If it is still in place whenthe Microsoft deal is finalised, Nokia could briefly operate theplant as a contract manufacturer for Microsoft, but bothcompanies are hoping to avoid this.

Nokia declined to comment beyond saying it was committed togetting its Indian assets unfrozen and "once again calls on theIndian government and tax authority to work with urgency towardsa solution".

The Delhi High Court is due to hear the case on Tuesday.

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