Bloomberg News

VimpelCom Posts Biggest Weekly Drop in Five on Sale Dispute

November 04, 2011

(Updates size of weekly drop in first paragraph, adds closing price in fourth.)

Nov. 4 (Bloomberg) -- VimpelCom Ltd., Russia’s second- biggest mobile operator, had its steepest weekly loss in five as a feud between shareholders intensifies.

Telenor ASA, which owns about a quarter of VimpelCom’s voting shares, filed a complaint with the U.S. Securities and Exchange Commission on Oct. 31. Telenor alleges a move to replace the mobile operator’s board shouldn’t be allowed under an agreement among shareholders. The dispute centers on whether Altimo, a unit of Russia’s Alfa Group, still controls at least 25 percent of VimpelCom shares. If not, the board of the telecommunications company could be replaced.

“It will add negative sentiment to the stock,” Luis Saenz, London-based chief executive officer of the U.S. unit of Moscow-based brokerage Otkritie Financial Corp, said via e-mail on Nov. 2. “Risks for minority shareholders are still high, and escalation of the conflict is definitely not good for Vimpelcom. Investors are confused with the mess.”

Vimpelcom, Russia’s second-biggest mobile-phone company after OAO Mobile Telesystems, rose 0.5 percent to $11.32 in New York, paring its weekly loss to 1.6 percent, the most since the period ended Sept. 30.

Altimo said in June it had reduced its stake in Vimpelcom to less than 25 percent. Telenor says Altimo sold the shares to a company that used a loan from companies associated with Alfa Group to purchase the shares, effectively keeping control of more than 25 percent of the company with Alfa.

The VimpelCom governance agreement between Telenor and Altimo expires six months after one of them reduces its stake to below 25 percent, allowing replacement of Vimpelcom’s board of directors, Dag Melgaard, Telenor’s communication manager, said in a telephone interview from Fornebu, Norway, on Nov. 2.

Altimo says it no longer owns 25 percent of VimpelCom and confirmed it wants to end the governance agreement, Russian news agency Interfax reported Nov. 2. Evgeny Dumalkin, vice-president at Altimo, declined to comment when contacted by Bloomberg News yesterday. Russian markets are closed for a national holiday today.

--Editors: Brendan Walsh, Marie-France Han

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net;

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net


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