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VimpelCom Supervisory Board Approves New Terms for Combination With WIND TELECOM S.p.A. (Formerly Weather Investments S.p.A.)

AMSTERDAM NEW YORK Jan. 17, 2011 VimpelCom Ltd. ("VimpelCom" or the "Company")

4 October 2010 US$21.3 billion US$9.4 billion 31 December 2009

The management and the Supervisory Board continue to believe strongly in the strategic rationale of the Transaction which will create a new global telecom player with significant scale and an attractive mix of developed and emerging market assets, well-positioned to realize profitable growth.

Jo Lunder "VimpelCom’s Supervisory Board is pleased to approve this transaction.  This combination will create a top-tier global telecoms company and should drive significant value for all our shareholders.  While we acknowledge Telenor’s divergent view, we believe that the majority of our shareholders recognize the strategic and financial merits of this transaction.  In the end, as it should be with a public company, it will be the special general meeting of shareholders that will make the final determination."

"We have made substantial progress since we announced this transaction last October and we remain on track to close in the second quarter of this year.  We continue to believe that this transaction offers our shareholders exposure to attractive growth markets and the opportunity to diversify further our revenue base in terms of geography, currency and market characteristics.  It also positions VimpelCom to take full advantage of the significant opportunities that we see in the fast-growing mobile data services market."

Transaction rationale

The combination of VimpelCom and Wind Telecom will create a new global top-tier telecom operator, which is expected to lead to substantial value creation for shareholders, both in the short and long term.  The combination is consistent with the original objectives announced by our strategic shareholders when creating VimpelCom Ltd., namely to increase the current scope of operations and scale of the business.

The enlarged company will operate in 19 countries around the world, covering a population of 838 million people, with over 173 million mobile subscribers.

Russia Italy Eastern Europe Asia Africa

The Transaction is financially attractive and offers good value creation for shareholders, in particular taking into account that the equity consideration represents a relatively small proportion of the total enterprise value. The implied EV/EBITDA multiple is low compared to recent precedent transactions in the telecoms sector.  In addition, the Transaction preserves the Company’s dividend payout commitment.

US$2.5 billion

Transaction terms

US$1,495 million

The VimpelCom common and convertible preferred shares issued to Wind Telecom shareholders at the closing of the Transaction will together represent approximately a 20.0% economic interest and a 30.6% voting interest in the enlarged VimpelCom group. Upon issuance of the new VimpelCom common and convertible preferred shares, Telenor ASA, holding through its subsidiaries Telenor Mobile Communications AS and Telenor East Invest AS ("Telenor"), and Altimo Holdings & Investments Limited, holding through its subsidiary Altimo Cooperatief U.A. ("Altimo"), will hold approximately 31.7% and 31.4% of the economic rights and 25.0% and 31.0% of the voting rights, respectively, of VimpelCom. Minority shareholders in VimpelCom will represent approximately 17.0% of the economic rights and 13.4% of the voting rights.

Algerian value sharing arrangement

Notwithstanding the Algerian Government’s ongoing measures against Orascom Telecom’s Algerian subsidiary, Orascom Telecom Algerie ("OTA"), OTA remains a strategically important asset for VimpelCom. VimpelCom is therefore interested in exploring with the Algerian Government a resolution which would allow VimpelCom to retain OTA following completion of the Transaction.

In the event that such a resolution is not possible within a reasonable time frame, VimpelCom has sought to lessen its financial exposure to the situation surrounding OTA by agreeing with Weather II an option, which can be exercised by VimpelCom at any time within six months from the closing of the Transaction, to enter into a value sharing arrangement with Weather II with respect to Orascom Telecom’s shareholding in OTA.



4 October 2010 US$6.5 billion US$5.0 billion

Italy US$8.5 billion November 2010

US$24.8 billion US$21.1 billion US$25.7 billion US$21.7 billion

Orascom Telecom Spin-off and Wind Italy Spin-off

Egypt North Korea

US$770 million US$100 million

Shareholder meeting and pre-emptive rights  

The issuance of the VimpelCom common shares and convertible preferred shares in the Transaction requires the approval of a majority of shareholder votes present at the forthcoming Special General Meeting of VimpelCom shareholders (the "VimpelCom SGM").  We understand that Telenor remains opposed to the Transaction.

January 10, 2011 US$27.7 million

The Company has also received letters from Telenor wherein Telenor asserts that it is entitled to pre-emptive rights under the Shareholders Agreement in connection with the issuance of new shares to the Wind Telecom shareholders.  Telenor alleges that Altimo’s actions in this regard are a breach of the clause in the Shareholders Agreement requires the parties to act in good faith and in a constructive manner such as to give effect to the provisions of the Shareholders Agreement.  Telenor’s letters further assert that the Company will be actively participating in Altimo’s efforts to prevent Telenor from exercising its pre-emptive rights if the Company takes the position that no pre-emptive rights apply to the Transaction.  Telenor has stated that it will pursue all available remedies against the Company, Altimo and Wind Telecom shareholders in the event any shares are issued to the Wind Telecom shareholders without giving effect to Telenor’s claimed pre-emptive rights.

After considering the information received from Altimo and Telenor and after taking into account legal advice given to the Company and to its independent directors, the Supervisory Board of VimpelCom concluded that the Transaction should be regarded as a Related M&A Transaction.  As a Related M&A Transaction, the Transaction will not be subject to any pre-emptive rights for either Altimo or Telenor under the Shareholders Agreement upon the issuance of the new shares to the Wind Telecom shareholders.

Shareholders Agreement

Under the revised terms of the Transaction, the existing Shareholders Agreement among Altimo, Telenor and the Company will not be amended.  The Shareholders Agreement will remain in effect following the Transaction, provided that neither Altimo nor Telenor fall below a 25% voting stake in the Company as a result of a transfer of any of their respective shares.  Under the Shareholders Agreement, Telenor and Altimo will continue to have the right to designate three board members each and three board members will continue to be unaffiliated with either Altimo or Telenor.

Estimated timetable

The conditions precedent to closing of the Transaction include, among others, receipt of consents required under competition or anti-trust laws in certain jurisdictions, VimpelCom shareholder approval for the issuance of new VimpelCom common and convertible preferred shares in connection with the Transaction and completion of actions and transactions required to be completed before closing pursuant to the refinancing plan for the Transaction.

March 17, 2011

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January 19 London 15:30 CET Moscow


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VimpelCom has engaged UBS Investment Bank and Deutsche Bank AG to act as its financial advisors and Akin Gump Strauss Hauer & Feld LLP to act as its legal advisor.

Citigroup Global Markets Limited acted as financial advisor to the Supervisory Board of VimpelCom.

UBS Investment Bank, Deutsche Bank AG and Citigroup Global Markets Limited each provided a fairness opinion to the Supervisory Board of VimpelCom.

About VimpelCom

Amsterdam Russia Ukraine Kazakhstan Uzbekistan Georgia Armenia Kyrgyzstan Vietnam Cambodia

About WIND TELECOM S.p.A. (formerly Weather Investments S.p.A.)

Algeria Bangladesh Egypt Pakistan North Korea Canada

Cautionary statement regarding forward-looking statements

December 31, 2009

SOURCE VimpelCom Ltd.

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