ZURICH, April 10 (Reuters) - Sunrise Communications' top shareholder on Wednesday blocked plans to extend the company's right to issue fresh capital to 2021, complicating its bid to buy Liberty Global's Swiss UPC cable business for $6.3 billion.
The rejection by Freenet at the Swiss telecoms firm's annual shareholder meeting does not scupper the takeover, which was announced in February.
A separate meeting will decide on the $4.1 billion capital increase needed to push that through.
But the thumbs-down from German telecoms company Freenet, which holds a 24.5 percent stake, denied Sunrise the required two-thirds majority to extend capacity for authorised capital until 2021. The measure got only 59.3 percent support.
"Together with Freenet we could have agreed it makes sense by pushing forward a (further potential) capital increase to take pressure off the large capital increase," Sunrise finance chief Andre Krause told Reuters.
"Now we can't do that. Freenet robbed us of optionality."
Freenet had already said it would not take part in the main capital hike, saying it was disturbed by how the transaction was structured. It has not yet decided how to vote at the extraordinary shareholder meeting that will be convened to approve that, Freenet lawyer Alexander Borgwardt told Reuters on the sidelines of the annual meeting.
The date for that meeting - where only a simple majority is needed - has yet to be set pending regulatory approval for the deal.
Authorising fresh capital now could have helped contribute some of the money needed for the deal, Borgwardt said, adding: "We think this should be voted on at the end, when the entire transaction will be discussed."
Sunrise Chairman Peter Kurer said a two-thirds majority for the capital increase could be needed should Liberty Global in the meantime buy shares in Sunrise.
In that case, it would be easier for Freenet with its nearly one-quarter stake to block the capital increase because not all shareholders attend meetings. The turnout on Wednesday, for instance, was 62 percent of the voting capital.
There was no evidence at this stage that Liberty planned such a move, Krause said.
Kurer had earlier expressed optimism that Sunrise would win backing to raise the money needed to complete the UPC takeover.
Sunrise officials have met more than 170 large shareholders and potential investors in recent weeks to outline the deal. "After these talks they view the transaction significantly more positively," he said.