Alfa, Telenor offer to buy VimpelCom shares
MOSCOW. Feb 9 (Interfax) - VimpelCom Ltd, the Bermuda-registered entity around which Altimo, the telecommunications arm of Russia's Alfa Group, and Norway's Telenor plan to merge assets of Russian cellar provider OJSC VimpelCom and Ukraine's Kyivstar, has made an offer to acquire ordinary shares and depositary receipts in OJSC VimpelCom, VimpelCom Ltd said in a statement.
The company is inviting the holders of OJSC VimpelCom shares and Depositary Receipts to swap these securities for VimpelCom Ltd's own securities or cash, the statement said.
Telenor ASA and Altimo Holdings & Investments Ltd. the majority owners of OJSC VimpelCom, have agreed, subject to the conditions described, to contribute their respective shareholdings in OJSC VimpelCom and their combined 100% shareholding in Kyivstar to create VimpelCom Ltd., "a leading emerging markets mobile operator with enhanced market presence and growth, profitability and cash flow generation prospects," the statement said.
The exchange ratio used in determining the post-contribution equity ownership by OJSC VimpelCom's and Kyivstar's respective shareholders is 3.4:1.
In the Exchange Offer, VimpelCom Ltd is offering to all holders of OJSC VimpelCom ADSs - 1 VimpelCom Ltd. common depositary receipts (DRs) (representing 1 VimpelCom Ltd. common share) in exchange for each OJSC VimpelCom ADS; to all holders of OJSC VimpelCom common shares - 20 VimpelCom Ltd. common DRs in exchange for each OJSC VimpelCom common share; and to all holders of OJSC VimpelCom preferred shares - 20 VimpelCom Ltd. preferred DRs (each representing one VimpelCom Ltd. preferred share) in exchange for each OJSC VimpelCom preferred share.
Alternatively, holders of OJSC VimpelCom shares and ADSs may elect to receive a cash payment of 0.01 Russian rubles for each common share or preferred share and 0.0005 Russian rubles for each ADS. This nominal cash consideration is being offered to comply with Russian regulations and is not intended to constitute fair market value. Accordingly, VimpelCom Ltd. urges holders of OJSC VimpelCom shares and ADSs not to elect to receive cash consideration, the statement says.
The Exchange Offer comprises a U.S. Offer and a Russian Offer. The U.S. Offer is open to all U.S. holders of OJSC VimpelCom shares and all holders of OJSC VimpelCom ADSs, wherever located. The Russian Offer is open to all holders of OJSC VimpelCom shares, wherever located. However, only shareholders who are "qualified investors" under Russian law may receive DRs in exchange for their shares tendered into the Russian Offer.
The offer lasts from February 9 to April 15 inclusive in the United States and from February 9 to April 20 in Russia. Credit Suisse Securities and Morgan Stanley Incorporated are managers for the U.S. offer.
Successful completion of the Exchange Offer is contingent on, among other things, more than 95% of OJSC VimpelCom's outstanding shares being tendered in the Exchange Offer, all legal and regulatory proceedings involving Altimo and Telenor being terminated or withdrawn and the receipt of required regulatory and other approvals, including approvals by the anti-monopoly authorities in Russia and Ukraine.
The Russian Governmental Commission on Foreign Investments announced its approval of the proposed transaction under the Russian Foreign Investment Law on February 3, 2010.
It is expected that, following completion of the Exchange Offer, OJSC VimpelCom will be delisted from the NYSE and will no longer be traded on the Russian Trading System, the Vimpelcom Ltd statement said.
Immediately following the successful completion of the Exchange Offer, VimpelCom Ltd. intends to acquire all of the outstanding shares of CJSC Kyivstar G.S.M. in exchange for VimpelCom Ltd. DRs .
Key benefits of the Transaction for shareholders of OJSC VimpelCom include Ownership of Kyivstar, a leading mobile operator in Ukraine; Improved strategic profile with potential for operational improvements and efficiencies; Creation of a robust corporate and governance structure which will align the interests of all shareholders; Committed policy to pay regular and meaningful dividends; and a strong platform to unlock future growth and shareholder value creation, the statement said.
Jo Lunder has been designated as Chairman of the Board of VimpelCom Ltd. Lunder served as Chief Operating Officer of OJSC VimpelCom between 1999 and 2001 and Chief Executive Officer of OJSC VimpelCom between 2001 and 2003. He was Chairman of the Board of OJSC VimpelCom between 2003 and 2005. From 1993 to 1999, Lunder was employed in various capacities by Telenor and its affiliates.
Alexander Izosimov has been appointed as Chief Executive Officer of VimpelCom Ltd. He was CEO of OJSC VimpelCom between 2003 and 2009 and has previously held senior positions at McKinsey & Co. and Mars. Izosimov is currently Chairman of the GSM Association.
"Today's announcement is another big step towards launching VimpelCom Ltd. as a leading value creation platform in global emerging markets telecoms," the statement quoted Izosimov.
"With local leadership across Russian, Ukrainian and CIS markets, VimpelCom Ltd will have the right corporate and governance structure to drive further growth, profitability, cash flows and total returns for shareholders. The proposed transaction will unlock the full potential of both OJSC VimpelCom and Kyivstar and offer further value creation opportunities through operational improvements, while preserving the drivers of both companies' past performance and earnings resilience. Initial feedback from investors has been extremely supportive, and I am confident the Exchange Offer will be a great success," Izosimov said.
On completion of the transaction, VimpelCom Ltd. will be a leading mobile operator in Russia, Ukraine and the CIS, with a significant presence in Southeast Asia.
The company will have over 87.7 million subscribers as of September 30, 2009; pro forma net operating revenues of $12.6 billion for the year ended December 31, 2008 and $7.4 billion for the nine months ended September 30, 2009; pro forma net income for 2008 of $1.1 billion and $1.1 billion for the nine months ended September 30, 2009; and pro forma adjusted OIBDA of $6.3 billion with OIBDA margin of 49.8% for 2008, and of $3.8 billion with OIBDA margin of 51.1% for the nine months ended September, 2009.
Altimo and Telenor said in October 2009 that they intended to merge OJSC VimpelCom and Kyivstar into the new entity, VimpelCom Ltd.
OJSC VimpelCom has 57,707,622 issued shares, including 51,281,022 ordinary shares and 6,426,600 preferred shares. Altimo owns all the preferred shares. Both ordinary and preferred shares carry voting rights, and one share is represented by 20 DR.
Altimo and Telenor own respectively 44% and 29.9% of VimpelCom and 56.5% and 43.5% of Kyivstar. They will, according to the terms of the deal, hand these assets to the Bermuda-registered VimpelCom Ltd. Altimo will receive a 43.9% voting stake in VimpelCom Ltd and Telenor - 35.4%. Another 20.7% will be in free float - the shareholders planned to list VimpelCom Ltd on the New York Stock Exchange.
Altimo and Telenor also agreed to halt all disputes and to act to withdraw lawsuits or resolve disputes pending the closure of the transaction.
Izosimov told The Financial Times in an interview that he was sure the two core shareholders would be able to work together and urged minority shareholders to back the transaction. He told the FT he was confident that the shareholders had now "buried the hatchet."