Oct. 5, 2009 (Hugin AS) -- (OSLO/MOSCOW 5 October 2009) Telenor Group and Altimo (the telecom
arm of the Alfa Group) announce an agreement to combine their common
assets in VimpelCom and Kyivstar to create a leading emerging markets
mobile operator.
(Press conference at Fornebu at 10:00 CET, see below)
The parties have reached an agreement to combine their holdings in
OJSC VimpelCom and Kyivstar into a new jointly-owned mobile telecoms
operator, VimpelCom Ltd. The united company will provide high-quality
integrated mobile telecom services in Russia, Ukraine and other CIS
countries, as well as Georgia, Vietnam, Cambodia and Laos. VimpelCom
Ltd. will seek to expand its operations in other rapidly developing
markets in Europe, Asia and Africa, becoming one of the world's
leading players in the industry.
VimpelCom Ltd. is incorporated in Bermuda, will be headquartered in
the Netherlands and will be listed on the NYSE.
Key benefits of the proposed transaction include the following:
* Establish a leading emerging markets mobile operator with
significant in-market and international growth opportunities;
* Participation in the value creation from common management of
the combined assets;
* Attractive dividend potential from cash-generative Russian and
Ukrainian operations;
* Alignment of Telenor and Altimo's interests going forward in
Russia and Ukraine in a listed entity; and
* Resolution of all outstanding disputes between Telenor and
Altimo.
The parties have agreed to suspend all their ongoing legal
proceedings and take action to withdraw or settle them prior to the
transaction being completed. The governance structure agreed for
VimpelCom Ltd. is designed to significantly reduce the potential for
new disputes between the shareholders.
Jon Fredrik Baksaas, President and CEO of Telenor Group, said:
"Telenor is proud to take part in creating one of the most
competitive and important players in the world of mobile
communication. VimpelCom Ltd. will have ample opportunities for
future growth and value creation for the benefit of all shareholders.
We have turned a five-year struggle into an exciting venture for the
future, and are pleased to announce an agreement that will enable us
to focus completely on the long term value creation opportunity of
the new company and put all previous disagreements behind us. We
strongly urge all other OJSC VimpelCom shareholders to support the
proposed transaction and join us in forming VimpelCom Ltd."
Alexei Reznikovich, CEO of Altimo, said:
"Today is a truly historic day for our companies. We witness the
appearance of a new star in the global telecom space. Altimo and
Telenor have joined together to create a true leader in the telecoms
market in the interests of all shareholders and subscribers. The new
company will have unparalleled experience in providing modern
telecoms solutions in strongly competitive environments. Moreover,
the new company will be strong financially and therefore much more
attractive to investors all around the globe who are looking for
stable investment opportunities. We are confident that this merger
will substantially increase shareholder value of the new company."
Details of Proposal
Deal Structure
Subject to receiving the required regulatory and other approvals,
VimpelCom Ltd. intends to make an offer whereby OJSC VimpelCom shares
and ADRs will be exchanged for Depositary Receipts ("DRs")
representing shares in VimpelCom Ltd. (the "Exchange Offer").
Immediately following the successful completion of the Exchange
Offer, Telenor and Altimo will contribute their respective
shareholdings in Kyivstar in exchange for shares in VimpelCom Ltd.
The parties expect to complete the proposed Exchange Offer and the
other related transactions by mid-2010, following which VimpelCom
Ltd. intends to delist OSJC VimpelCom.
A compelling value proposition for OJSC VimpelCom minority
shareholders
The Exchange Offer will provide an attractive exchange ratio for OJSC
VimpelCom minority shareholders. The effective exchange ratio between
the equity of OJSC VimpelCom and that of Kyivstar will be 3.40:1. In
addition to the other transaction benefits highlighted above, OJSC
VimpelCom's minority shareholders will benefit from VimpelCom Ltd.'s
improved credit profile through Kyivstar's low leverage and high cash
conversion.
Significant future growth prospects
Combining OJSC VimpelCom and Kyivstar will create one of the largest
emerging markets mobile operators. For 2008, the combined revenues
amount to approximately USD12.6bn and the combined EBITDA to
USD6.3bn, with approximately 85 million subscribers at year-end 2008.
The parties believe that the combined entity has significant future
growth potential, both within its existing markets and through
potential expansion into new markets in the CIS, Asia and Africa. In
addition, common management of the combined assets should yield
meaningful operating efficiencies going forward.
Governance principles
VimpelCom Ltd. will have a nine-member board of directors, three of
whom will be nominated by Telenor, three of whom will be nominated by
Altimo, and three of whom will be independent and unaffiliated with
either Telenor or Altimo. The Chairman of the Board will be one of
the independent directors, unless otherwise agreed. Independent board
members will act as a swing vote, with neither Telenor nor Altimo
having a veto on any matter. The parties' shareholders agreement and
other agreements, copies of which will be filed with the United
States Securities and Exchange Commission (the "SEC"), are governed
by New York law, and the parties have agreed to resolve any future
disputes through arbitration proceedings in London.
Incorporated in Bermuda, headquartered in the Netherlands and listed
on the NYSE
Telenor and Altimo believe that VimpelCom Ltd.'s Bermuda
incorporation and the choice of New York governing law will provide
stability for VimpelCom Ltd. shareholders.
