Russia's VimpelCom backs new deal terms with Wind Telecom, Telenor against

© RIA Novosti . Ilya Pitalev / Go to the mediabank VimpelCom
 VimpelCom  - Sputnik International
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The supervisory board of VimpelCom has approved a revised deal to merge with Wind Telecom, belonging to Egyptian tycoon Naguib Sawiris to create the world's sixth largest telecommunications firm, despite opposition from the Russian company's core shareholder Norway's Telenor, VimpelCom said on Monday.

The supervisory board of VimpelCom has approved a revised deal to merge with Wind Telecom, belonging to Egyptian tycoon Naguib Sawiris to create the world's sixth largest telecommunications firm, despite opposition from the Russian company's core shareholder Norway's Telenor, VimpelCom said on Monday.

"Under the new terms of the transaction, Wind Telecom shareholders will contribute their shares in Wind Telecom to VimpelCom in exchange for 325,639,827 newly-issued VimpelCom common shares, 305,000,000 newly-issued VimpelCom convertible preferred shares and $1,495 million in cash," VimpelCom said in a statement.

VimpelCom had originally planned to issue 325.6 million new common shares and pay $1.8 billion to Sawiris in a deal worth $6.6 billion.

Last autumn, VimpelCom signed a merger contract with Weather Investments S.p.A, now called Wind Telecom, in which the Russian firm received 51.7 percent of Orascom Telecom, an operator in Africa, Asia and Canada, and 100 percent of Wind Telecomunicazioni S.p.A., an Italian provider.

Algeria plans to privatize Djezzy, part of Orascom, and also claims that it has tax arrears.

VimpelCom said it would also share any financial losses or gains with Sawiris related to the possible nationalization of Djezzy.

The deal was revised after Telenor, which spent years fighting boardroom battles with VimpelCom, had opposed it. It is still against the transaction, VimpelCom said.

VimpelCom shares issued to Wind shareholders will represent a 20.0% economic interest and a 30.6% voting interest in VimpelCom.

After the issue of additional VimpelCom shares is over, Telenor and Altimo, the telecoms arm of Alfa Group belonging to billionaire Mikhail Fridman, will hold 31.7% and 31.4% of VimpelCom's economic rights and 25.0% and 31.0% of the voting rights, respectively. Minority shareholders will represent 17.0% of the economic rights and 13.4% of the voting rights.

"VimpelCom has obtained commitments of up to $6.5 billion from Russian and international banks," the company said.

"Of this amount, VimpelCom expects to draw down approximately $5.0 billion to finance the cash portion of the transaction consideration and to re-finance the Orascom Telecom debt which will be due upon acquisition by VimpelCom. Half will be raised in the form of a Russian rouble term loan and the balance via a U.S. dollar bridge loan to be refinanced in the bond markets. Wind Italy refinanced $8.5 billion in November 2010 (fully ring-fenced from VimpelCom) and obtained necessary waivers from its high yield and PIK note holders."

VimpelCom's gross debt will increase to about $25.7 billion and net debt to about $21.7 billion after the deal is over, the company said in a statement.

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

VimpelCom share issue requires the approval of a majority of shareholder votes present at a special general meeting of VimpelCom shareholders.

Under a preliminary schedule, the company will issue shares on March 17, 2011, while the deal is expected to close in the first half of 2011.

MOSCOW, January 17 (RIA Novosti)

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