VimpelCom
Ltd. Announces Launch of Exchange Offer for OJSC VimpelCom Shares and American
Depositary Shares
Platform
for Value Creation in Global Emerging Markets Telecoms
Amsterdam, 9 February 2010:
VimpelCom Ltd. today announces the commencement of its exchange offer to holders
of shares and American Depositary Shares (“ADSs”) of Open Joint Stock Company
“Vimpel-Communications” (“OJSC VimpelCom”) (NYSE: VIP), in which it will offer
depositary shares representing VimpelCom Ltd. shares (“DRs”) or a nominal cash
amount in exchange for OJSC VimpelCom securities (the “Exchange Offer”).
Immediately following the successful completion of the Exchange Offer, VimpelCom
Ltd. intends to acquire all of the outstanding shares of Closed Joint Stock
Company “Kyivstar G.S.M.” (“Kyivstar”) in exchange for VimpelCom Ltd. DRs
(collectively referred to as the “Transaction”).
Key
benefits of the Transaction for shareholders of OJSC VimpelCom
include:
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Ownership
of Kyivstar, a leading mobile operator in Ukraine;
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Improved
strategic profile with potential for operational improvements and
efficiencies;
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Creation
of a robust corporate and governance structure which will align the
interests of all shareholders;
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Committed
policy to pay regular and meaningful dividends; and
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Strong
platform to unlock future growth and shareholder value
creation.
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Alexander
Izosimov, CEO of VimpelCom Ltd., commented:
“Today’s
announcement is another big step towards launching VimpelCom Ltd. as a leading
value creation platform in global emerging markets telecoms. 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.”
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,
with:
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Over
87.7 million subscribers as of September 30, 2009
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Pro
forma net operating revenues of USD 12.6 billion for the year ended
December 31, 2008 and USD 7.4 billion for the nine months ended September
30, 2009
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Pro
forma net income for 2008 of USD 1.1 billion and USD 1.1 billion for the
nine months ended September 30, 2009
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Pro
forma adjusted OIBDA of USD 6.3 billion with OIBDA margin of 49.8% for
2008, and of USD 3.8 billion with OIBDA margin of 51.1% for the nine
months ended September, 2009
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Jo
Lunder has been designated as Chairman of the Board of VimpelCom Ltd. Mr. 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, Mr.
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. Mr. Izosimov is currently Chairman of
the GSM Association.
Exchange
Offer and Terms
Telenor
ASA (“Telenor”) and Altimo Holdings & Investments Ltd. (“Altimo”), the
majority owners of OJSC VimpelCom, have agreed, subject to the conditions
described below, 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 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:
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to
all holders of OJSC VimpelCom ADSs: one VimpelCom Ltd. common DR
(representing one VimpelCom Ltd. common share) in exchange for each OJSC
VimpelCom ADS;
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to
all holders of OJSC VimpelCom common shares: twenty VimpelCom Ltd. common
DRs in exchange for each OJSC VimpelCom common share;
and
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to
all holders of OJSC VimpelCom preferred shares: twenty VimpelCom Ltd.
preferred DRs (each representing one VimpelCom Ltd. preferred share) in
exchange for each OJSC VimpelCom preferred
share.
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Alternatively,
holders of OJSC VimpelCom shares and ADSs may elect to receive a cash payment of
0.01 Russian roubles for each common share or preferred share and 0.0005 Russian
roubles 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
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.
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.
In
connection with the U.S. Offer, VimpelCom Ltd. has filed a registration
statement on Form F-4 with the United States Securities and Exchange Commission
(the “SEC”) that contains a prospectus and related U.S. Offer acceptance
materials. VimpelCom Ltd. will mail the prospectus, together with the related
U.S. Offer acceptance materials, to U.S. holders of OJSC VimpelCom shares and to
all holders of OJSC VimpelCom ADSs, wherever located. Holders of these
securities are urged to read the prospectus and related U.S. Offer acceptance
materials carefully because they contain important information. Copies of the
prospectus and related U.S. Offer acceptance materials may be obtained from
Innisfree M&A Incorporated, the information agent for the U.S. Offer, at the
following telephone numbers: 1-877-800-5190 (for shareholders holders and ADS
holders) and 1-212-750-5833 (for banks or brokers). Copies of the registration
statement and exhibits also may be obtained free of charge from the SEC’s
website at www.sec.gov, and from VimpelCom Ltd.’s website at
www.vimpelcomlimited.com.
In
connection with the Russian Offer, VimpelCom Ltd. has filed a voluntary tender
offer document with the Russian Federal Service for the Financial Markets. OJSC
VimpelCom will deliver the Russian voluntary tender offer document, together
with the recommendations of its board of directors and related Russian Offer
acceptance materials, to holders of OJSC VimpelCom shares. Copies of the Russian
voluntary tender offer document and other documents related to the Russian offer
may be obtained from ZAO “NATIONAL REGISTRATION COMPANY” (“NRK”), the agent for
the Russian offer, at the following telephone numbers: +7 (495) 440-6324/25/45
ext.205, or from OJSC VimpelCom at the following telephone number : +7(495) 974
5888.
Credit
Suisse Securities (USA) LLC and Morgan Stanley & Co. Incorporated are acting
as dealer managers for the U.S. Offer.
Exchange
Offer Timetable
The
Exchange Offer has been launched today, February 9, 2010. The U.S. Offer will
close at 5:00 pm New York City time on April 15, 2010 and the Russian Offer will
close at 11:59 pm Moscow time on April 20, 2010, unless extended.
Holders
of OJSC VimpelCom shares and ADSs who wish to participate in the U.S. Offer must
deliver their U.S. Offer acceptance materials to the U.S. exchange agent prior
to the expiration of the U.S. Offer in accordance with the instructions
contained therein. Holders of OJSC VimpelCom shares who wish to participate in
the Russian Offer must deliver their Russian Offer acceptance materials to the
Russian exchange agent prior to the expiration of the Russian Offer in
accordance with the instructions contained therein.
Transaction
Rationale
The
combination of OJSC VimpelCom and Kyivstar into one consolidated company will
create a stronger business with enhanced market presence and growth prospects,
leading to substantial value creation potential for OJSC VimpelCom shareholders
and benefits for all of our shareholders, subscribers and employees. In
particular, the Transaction will:
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Create
a leading emerging markets mobile operator with over 87.7 million
subscribers as of September 30, 2009, USD 12.6 billion pro forma combined
net operating revenues for the 2008 fiscal year and USD 7.4 billion
combined pro forma net operating revenues for the nine months ended
September 30, 2009;
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Improve
OJSC VimpelCom’ s and Kyivstar’ s positions in their existing markets,
enabling them to take advantage of attractive opportunities for in-market
consolidation and raising the overall profile of the combined group among
its peers and competitors;
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Strengthen
OJSC VimpelCom’s and Kyivstar’s strategic profiles;
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Enable
OJSC VimpelCom and Kyivstar to be managed on a unified basis, with the
potential for operational improvements and efficiencies;
and
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Align
the interests of all shareholders of OJSC VimpelCom and Kyivstar by
resolving outstanding disputes between shareholders and creating a basis
for a robust corporate and governance
structure.
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VimpelCom
Ltd.’s immediate focus will be to optimise its financial, operational and
marketing efficiencies in its core markets. In the medium term, VimpelCom Ltd.’s
strategy will be to explore opportunities for further expansion in emerging
markets, including Asia and Africa, with the goal of creating value for
shareholders. VimpelCom Ltd.’s dividend policy will be to distribute annually at
least 50% of free cash flow from Kyivstar and 50% of free cash flow from OJSC
VimpelCom’ s Russian operations.
Corporate
and Governance Structure
VimpelCom
Ltd.’s majority shareholders are Altimo and Telenor, which will hold 43.9% and
35.4% of the voting rights and 38.5% and 38.8% of the economic rights,
respectively (assuming 100% acceptance of the Exchange Offer), following
successful completion of the Transaction. Minority shareholders in VimpelCom
Ltd. will represent 20.7% of the voting rights and 22.7% of the economic rights
(assuming 100% acceptance of the Exchange Offer) following successful completion
of the Transaction.
VimpelCom
Ltd. is incorporated in Bermuda, headquartered in the Netherlands, and its
common DRs are intended to be listed on the NYSE. Altimo and Telenor have agreed
a clear and robust corporate governance structure and have entered into a
shareholders agreement governed by New York law that is designed to avoid
deadlock situations. Any future shareholder disputes will be resolved by
arbitration proceedings in London under UNCITRAL arbitration rules.
VimpelCom
Ltd.’s governance structure is also designed to align the interests of all
shareholders. The Chairman and CEO of VimpelCom Ltd. will be unaffiliated with
Telenor and Altimo. The Board of Directors will be comprised of three
unaffiliated members, three members designated by Telenor and three members
designated by Altimo, without any veto rights for any party. The affirmative
vote of a majority of the independent, unaffiliated shareholders will be
required for certain actions.
Summary
Financial Data
OJSC
VimpelCom reported net operating revenues of USD 10.1 billion for the year ended
December 31, 2008 and USD 6.4 billion for the nine months ended September 30,
2009.
Net
income for the year ended December 31, 2008 was USD 587.3 million and for the
first nine months of 2009 was USD 836.3 million. Adjusted OIBDA margin for 2008
was 48.0% and for the first nine months of 2009 was 49.8%.
Kyivstar
reported revenues of UAH 12.7 billion for the year ended December 31, 2008 and
UAH 8.6 billion for the nine months ended September 30, 2009. Kyivstar’s profit
for 2008 was UAH 5.1 billion and for the first nine months of 2009 was UAH 2.8
billion. Adjusted OIBDA margin for 2008 was 59.2% and for the first nine months
of 2009 was 55.5%.
On
a pro forma basis, VimpelCom Ltd. would have reported net operating revenues of
USD 12.6 billion for the year ended December 31, 2008 and USD 7.4 billion for
the nine months ended September 30, 2009. Pro forma net income for 2008 would
have been USD 1.1 billion and for the nine months ended September 30, 2009 would
have been USD 1.1 billion. Pro forma adjusted OIBDA margin for 2008 would have
been 49.8% and for the first nine months of 2009 would have been
51.1%.
Analyst
Call
Alexander
Izosimov, CEO of VimpelCom Ltd., will be hosting a conference call for analysts
and fund managers on Tuesday, February 9 at 14:00 London; 15:00 CET; 17:00
Moscow; and 09:00 EST. The dial-in details are provided below:
International:
+44 (0)20 7806 1956
UK
toll free: 0800 028 1277
Russia
toll free: 810 800 2546 1012
US
toll free: 1888 935 4577
Participants
should dial-in 5-10 minutes prior to the call.
The
conference call including Q&A will last approximately 1 hour.
Participants
will also be able to view the presentation which accompanies the call by
accessing the following link:
http://www.thomson-webcast.net/uk/dispatching/?event_id=05060c70e9d47f6329d1dd41a283d250&portal_id=a869d5c2e790f409f7c268c62bba979a
Contacts
Questions
on the U.S. Offer and requests for assistance may be directed to Innisfree
M&A Incorporated, or its London based representative Lake Isle M&A
Incorporated, the information agent in connection with the U.S.
Offer:
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Innisfree
M&A Incorporated
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Lake
Isle M&A Incorporated
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Arthur
Crozier (New York)
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Michael
Payne (London)
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501
Madison Avenue
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39
King Street
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New
York, NY 10022
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London
EC2V 8DQ
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Tel:
+1 212 750 5837
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Tel:
+44 (0)20 7710 9964
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Questions
on the Russian Offer and requests for assistance may be directed to NRK, the
Russian exchange agent in connection with the Russian Offer:
National
Registration Company
Svetlana
Galkina
Client
Relationship Manager
Address:
6 Versaeva Street, Moscow, 121357 Tel: +7(495) 440-6324/25/45
ext.205
Mobile:
+7 903 223 0764
Fax:
+7(495) 440-6355
Questions
on VimpelCom Ltd. may be directed to Citigate Dewe Rogerson:
Citigate
Dewe Rogerson
David
Westover, Director
Andrew
Hey, Director
3
London Wall Buildings London Wall
London
EC2M 5SY, United Kingdom
Tel:
+44 (0)20 7638 9571
Questions
on OJSC VimpelCom may be directed to OJSC VimpelCom’ s Investor Relations
team:
OJSC
VimpelCom Investor Relations Team
Email:
InvestorRelations@VimpelCom.com
4
Krasnoproletarskaya Street
Moscow
127006, Russia
Tel:
+7(495) 974 5888
Fax:
+7(909) 991 7903
Questions
on Kyivstar may be directed to:
Telenor
Group
Dag
Melgaard, Group Communications
E-mail:
dag.melgaard@telenor.com
Tel:
(+47) 901 92 000
Dag
Eide, Investor Relations
E-mail:
dag.eide@telenor.com
Tel:
(+47) 458 05 050
About
OJSC VimpelCom
OJSC
VimpelCom is a telecoms operator providing voice and data services through a
range of mobile, fixed and broadband technologies. It operates in Russia,
Ukraine, Armenia, Georgia, Kazakhstan, Uzbekistan, Tajikistan, Vietnam and
Cambodia, covering territory with a total population of approximately 340
million, and has agreed to enter Laos through the acquisition of MIC Laos
announced in September 2009. As of September 30, 2009, OJSC VimpelCom’ s total
number of active mobile subscribers in Russia, the other countries of the CIS
and Georgia was approximately 65.4 million, primarily under the “Beeline” brand
name. With OJSC VimpelCom’ s February 2008 acquisition of Golden Telecom, a
leading provider of fixed-line telecoms and Internet services in Russia, OJSC
VimpelCom transformed itself into a leading integrated telecoms provider in
Russia and the CIS. As of September 30, 2009, OJSC VimpelCom had approximately
1.9 million fixed and mobile broadband subscribers.
About
Kyivstar
Kyivstar
is the leading mobile operator in Ukraine by total number of subscribers, with a
40.2% subscriber market share and approximately 22.3 million subscribers as of
September 30, 2009. Kyivstar benefits from having a strong cash flow generation
and low leverage and a leading brand awareness, service, network coverage and
quality in Ukraine. It is a leader in key sub-segments of the Ukrainian market,
including the mass and youth segments, and is focused on extending its broadband
services, positioning itself as the leading provider of multimedia services in
its market. Telenor currently owns 5 6.5% of Kyivstar’ s share capital through
its wholly owned subsidiary Telenor Mobile Communications AS and Altimo
currently owns 43.5% of Kyivstar’ s share capital indirectly through its wholly
owned subsidiary Storm LLC.
Important
Additional Information
In
connection with the U.S. Offer by VimpelCom Ltd. to acquire all outstanding
shares of OJSC VimpelCom (including those represented by ADSs), VimpelCom Ltd.
has filed with the SEC a registration statement on Form F-4, which includes a
prospectus and related U.S. Offer acceptance materials to register shares of
VimpelCom Ltd. (including those represented by DRs) to be issued in exchange for
OJSC VimpelCom shares held by U.S. persons and OJSC VimpelCom ADSs held by all
holders, wherever located. In addition, VimpelCom Ltd. will file a Statement on
Schedule TO with the SEC in respect of the U.S. Offer. Holders of OJSC
VimpelCom securities are urged to
carefully read the registration statement (including the prospectus), the
Statement on Schedule TO, and any other documents relating to the U.S. Offer
filed with the SEC, as well as any amendments and supplements to those
documents, because they contain important information. Free copies of the
registration statement, including the prospectus and related U.S. Offer
acceptance materials, the Statement on Schedule TO, and other relevant documents
filed with the SEC in respect of the U.S. Offer, can be obtained at the SEC’s
website at www.sec.gov. The prospectus and related U.S. Offer acceptance
materials are being mailed to holders of OJSC VimpelCom securities eligible to
participate in the U.S. Offer. Additional copies may be obtained for free from
Innisfree M&A Incorporated, the information agent for the U.S. Offer, at the
following telephone numbers: 1-877-800-5190 (for shareholders and ADS holders)
and 1-212-750-5833 (for banks or brokers).
This
announcement is not an offering document and does not constitute an offer to
sell or the solicitation of an offer to buy securities or a solicitation of any
vote or approval, nor shall there be any sale or exchange of securities in any
jurisdiction in which such offer, solicitation or sale or exchange would be
unlawful prior to the registration or qualification under the laws of such
jurisdiction. The solicitation of offers to exchange OJSC VimpelCom securities
for VimpelCom Ltd. DRs in the United States will only be made pursuant to the
prospectus and related U.S. Offer acceptance materials that are being mailed to
U.S. holders of OJSC VimpelCom shares and all holders of OJSC VimpelCom ADSs,
wherever located. An investor may only exchange OJSC VimpelCom shares for
VimpelCom Ltd. DRs in the Russian Offer if such investor is a “qualified
investor” under the applicable Russian rules and regulations. This announcement
is not for publication, release or distribution in or into or from any
jurisdiction where it would otherwise be prohibited.
This
press release does not constitute advertisement of securities, including
securities of foreign issuers, in the Russian Federation within the meaning of
Federal Law No. 39-FZ “On the Securities Market” dated April 22, 1996, as
amended (the “Securities Law”), Federal Law No. 46-FZ “On the Protection of
Rights and Lawful Interests of Investors on the Securities Market” dated March
5, 1999, as amended, and Federal Law No. 38-FZ “On Advertising” dated March 13,
2006, as amended, or a public offer to purchase, sell, exchange or transfer to
or for the benefit of any person resident, incorporated, established or having
their usual residence in the Russian Federation, or to any person located within
the territory of the Russian Federation, that does not fall under a legal
definition of a “qualified investor” within the meaning of Article 51.2 of the
Securities Law, or an invitation to or for the benefit of any such person, to
make offers to purchase, sell, exchange or transfer any such securities. The
securities of VimpelCom Ltd. have not been and will not be admitted for
placement, public placement or public circulation in the Russian Federation
within the meaning of Article 51.1 of the Securities Law.
Cautionary
statement regarding forward-looking statements
This
announcement contains “forward-looking statements.” Forward-looking statements
provide VimpelCom Ltd.’s current expectations or forecasts of future events.
Forward-looking statements include statements about VimpelCom Ltd.’s
expectations, beliefs, plans, objectives, intentions, assumptions and other
statements that are not historical facts. Any statement in this announcement
that expresses or implies VimpelCom Ltd.’s intentions, beliefs, expectations or
predictions (and the assumptions underlying them) is a forward-looking
statement. Words or phrases such as “anticipate,” “believe,” “continue,”
“estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,”
“predict,” “project,” “will” or similar words or phrases, or the negatives of
those words or phrases, may identify forward-looking statements, but the absence
of these words does not necessarily mean that a statement is not
forward-looking. Forward-looking statements are subject to known and unknown
risks and uncertainties and are based on potentially inaccurate assumptions that
could cause actual results to differ materially from those expected or implied
by the forward- looking statements. Such risks and uncertainties include, but
are not limited to:
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risks
related to the timing or ultimate completion of the
Transaction;
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the
possibility that expected benefits may not materialise as
expected;
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that,
prior to the completion of the Transaction, OJSC VimpelCom’ s business or
Kyivstar’ s business may not perform as expected;
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that
the parties are unable to successfully implement integration strategies or
otherwise realise any synergies that might arise from the
Transaction;
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future
operating or financial results;
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expectations
regarding the future growth of the telecoms industry;
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forecasts
regarding future macroeconomic performance or results;
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future
payments of dividends and the availability of cash for the payment of
dividends;
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future
acquisitions, business strategy and expected capital
spending;
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assumptions
regarding interest rates and inflation;
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changes
in governmental rules and regulations or actions taken by regulatory
authorities;
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unanticipated
changes in laws and regulations;
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potential
liability from future litigation; and
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other
risks and uncertainties that are beyond the parties’
control.
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If
such risks or uncertainties materialise or such assumptions prove incorrect,
actual results could differ materially from those expressed or implied by such
forward-looking statements and assumptions. The forward-looking statements
contained in this announcement are made as of the date hereof, and VimpelCom
Ltd. expressly disclaims any obligation to update or correct any forward-looking
statements made herein due to the occurrence of events after the issuance of
this announcement.