(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.
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. Bermuda is a neutral jurisdiction with a well-developed body of corporate law and a number of NYSE-listed companies. The senior management of VimpelCom Ltd. will be headquartered in Amsterdam. In view of OJSC VimpelCom's historic position as the first Russian company to list on the NYSE, the parties have chosen the NYSE for the listing of VimpelCom Ltd.
CEO
The parties will announce the selection of VimpelCom Ltd.'s CEO prior to the launch of the Exchange Offer.
The parties will continue to rely on the expertise and experience of senior management in Russia and Ukraine as the remaining details of the new company's business strategy and management structure is finalised.
Description of the Transactions
Assuming successful completion of the Exchange Offer, OJSC VimpelCom will become a wholly-owned subsidiary of VimpelCom Ltd. In addition, subject to receiving the required regulatory and other approvals, immediately upon completion of the Exchange Offer, Telenor and Altimo will contribute their respective Kyivstar shares to an entity that will become a subsidiary of VimpelCom Ltd. in exchange for shares in VimpelCom Ltd. (the "Kyivstar Share Exchange").
Pursuant to the proposed Exchange Offer, VimpelCom Ltd. intends to offer:
# to all holders of OJSC VimpelCom ADRs: 1 VimpelCom Ltd. Common DR or 0.0005 Russian Rubles in exchange for each OJSC VimpelCom ADR;
# to all holders of OJSC VimpelCom common shares: 20 VimpelCom Ltd. Common DRs or 0.01 Russian Rubles in exchange for each OJSC VimpelCom common share; and
# to all holders of OJSC VimpelCom preferred shares: 20 VimpelCom Ltd. Preferred DRs or 0.01 Russian Rubles in exchange for each OJSC VimpelCom preferred share.1
When Telenor and Altimo contribute their Kyivstar shares to VimpelCom Ltd., the effective exchange ratio will be 28.225 VimpelCom Ltd. shares for each Kyivstar share.2
The completion of the Exchange Offer will be conditional on obtaining more than 95% of OJSC VimpelCom's outstanding voting shares on a fully diluted basis, as well as the expiration or termination of any applicable regulatory waiting periods, the receipt of certain regulatory approvals, the receipt of waivers or consents from certain third parties, the withdrawal in their entirety or dismissal with prejudice of specified legal and regulatory proceedings, there being no orders or actions prohibiting or preventing the proposed transactions and certain other conditions specified in the agreements between the parties that will be described in the materials to be filed with the SEC. Following the successful completion of the Exchange Offer, a squeeze-out procedure will be launched for any OJSC VimpelCom shares or ADRs not tendered, and the OJSC VimpelCom shares and ADRs will be delisted.
Upon completion of both the Exchange Offer and the Kyivstar Share Exchange, the ownership in VimpelCom Ltd. will be distributed as per the table 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. Bermuda is a neutral jurisdiction with a well-developed body of corporate law and a number of NYSE-listed companies. The senior management of VimpelCom Ltd. will be headquartered in Amsterdam. In view of OJSC VimpelCom's historic position as the first Russian company to list on the NYSE, the parties have chosen the NYSE for the listing of VimpelCom Ltd.
CEO
The parties will announce the selection of VimpelCom Ltd.'s CEO prior to the launch of the Exchange Offer.
The parties will continue to rely on the expertise and experience of senior management in Russia and Ukraine as the remaining details of the new company's business strategy and management structure is finalised.
Description of the Transactions
Assuming successful completion of the Exchange Offer, OJSC VimpelCom will become a wholly-owned subsidiary of VimpelCom Ltd. In addition, subject to receiving the required regulatory and other approvals, immediately upon completion of the Exchange Offer, Telenor and Altimo will contribute their respective Kyivstar shares to an entity that will become a subsidiary of VimpelCom Ltd. in exchange for shares in VimpelCom Ltd. (the "Kyivstar Share Exchange").
Pursuant to the proposed Exchange Offer, VimpelCom Ltd. intends to offer:
# to all holders of OJSC VimpelCom ADRs: 1 VimpelCom Ltd. Common DR or 0.0005 Russian Rubles in exchange for each OJSC VimpelCom ADR;
# to all holders of OJSC VimpelCom common shares: 20 VimpelCom Ltd. Common DRs or 0.01 Russian Rubles in exchange for each OJSC VimpelCom common share; and
# to all holders of OJSC VimpelCom preferred shares: 20 VimpelCom Ltd. Preferred DRs or 0.01 Russian Rubles in exchange for each OJSC VimpelCom preferred share.1
When Telenor and Altimo contribute their Kyivstar shares to VimpelCom Ltd., the effective exchange ratio will be 28.225 VimpelCom Ltd. shares for each Kyivstar share.2
The completion of the Exchange Offer will be conditional on obtaining more than 95% of OJSC VimpelCom's outstanding voting shares on a fully diluted basis, as well as the expiration or termination of any applicable regulatory waiting periods, the receipt of certain regulatory approvals, the receipt of waivers or consents from certain third parties, the withdrawal in their entirety or dismissal with prejudice of specified legal and regulatory proceedings, there being no orders or actions prohibiting or preventing the proposed transactions and certain other conditions specified in the agreements between the parties that will be described in the materials to be filed with the SEC. Following the successful completion of the Exchange Offer, a squeeze-out procedure will be launched for any OJSC VimpelCom shares or ADRs not tendered, and the OJSC VimpelCom shares and ADRs will be delisted.
Upon completion of both the Exchange Offer and the Kyivstar Share Exchange, the ownership in VimpelCom Ltd. will be distributed as per the table below:
| Economic ownership %* | | Voting ownership %* | |
| Telenor | 38.84 | | 35.42 |
| Altimo | 38.46 | | 43.89 |
| Free float | 22.70 | | 20.69 |
| Total | 100.0% | | 100.0% |
* Ownership percentages assume 100% take-up of the Exchange Offer
The parties expect to complete the proposed Exchange Offer, the Kyivstar Share Exchange and the related transactions by mid-2010.
Telenor, Altimo and VimpelCom Ltd.'s respective governing bodies have approved the agreements and the proposed transactions. In addition, OJSC VimpelCom's Board of Directors has expressed its support for the proposed Exchange Offer.
