Bloomberg News

VimpelCom Bearish Bets Surge as Feud Escalates

August 20, 2012

VimpelCom Bearish Bets Surge as Feud Escalates

Telenor ASA, which owns 39.5 percent of the voting rights in VimpelCom, said yesterday that Russian regulators should drop “immediately” their lawsuit against the company and should allow VimpelCom to pay 2011 dividends. Photographer: Alexander Zemlianichenko Jr/Bloomberg

Bearish bets on VimpelCom Ltd. (VIP:US), the world’s sixth-biggest mobile phone company, reached the most expensive level this year after a conflict between shareholders and Russian authorities intensified.

Puts with an exercise level 10 percent below VimpelCom’s American depositary receipts’ current price cost 1.35 times more than calls betting on a 10 percent rally yesterday, according to data on one-month options compiled by Bloomberg. The price relationship known as skew touched the highest level since Dec. 19. The shares sank 3.1 percent yesterday to $10.47, the most in a month. The Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian stocks listed in the U.S. fell 1 percent to 93.70.

Telenor ASA (TEL), which owns 39.5 percent of the voting rights in VimpelCom, said yesterday that Russian regulators should drop “immediately” their lawsuit against the company and should allow VimpelCom to pay 2011 dividends. Russia’s Anti-Monopoly Service, known as FAS, is disputing the Nordic company’s right to raise its stake after it bought 11.3 percent of VimpelCom from Weather Investments II in February.

“Investors are running away,” Ivan Manaenko, head of research at Veles Capital LLC, said in a telephone interview from Moscow yesterday. “Everyone is extremely concerned that this conflict will start having an impact on the company’s financial results, its strategy, and that it will be reflected on the current stock price.”

The RTS stock-index futures expiring in September rose 0.7 percent to 141,200. The Market Vectors Russia ETF (RSX:US), the biggest U.S.-traded exchange-traded fund that holds Russian shares, dropped 0.7 percent to $27.69. The RTS Volatility Index rallied 2.9 percent to 32.42.

Puts to Sell Jump

A Moscow court banned Amsterdam-based VimpelCom’s Russian unit from paying dividends on 2011 profits because of the FAS dispute. Russian billionaire Mikhail Fridman’s Altimo, which had initiated proceedings against Telenor, said on Aug. 15 it raised its stake in VimpelCom to 40.5 percent of the voting rights by purchasing 305 million shares from Egyptian billionaire Naquib Sawiris’s Weather Investments.

“We believe the lawsuit should be dropped and injunctions withdrawn immediately,” Dag Melgaard, an Oslo-based spokesman for Telenor, said by e-mail yesterday.

The ratio of outstanding puts to sell VimpelCom shares versus call options to buy jumped to 0.48 on Aug. 14, the highest level since June 5, data compiled by Bloomberg show.

Voting Rights

Puts with an exercise level 10 percent below VimpelCom’s ADRs’ current price cost 1.14 times more than calls betting on a 10 percent rally as of yesterday, according to data on one-month options compiled by Bloomberg.

Telenor will buy 3.5 percent of voting rights in VimpelCom from Weather Investments by Oct. 1, increasing its stake to almost 43 percent of voting rights in VimpelCom, Melgaard said. Sawiris doesn’t own any more shares in VimpelCom, according to the company.

“None of the two main shareholders want to compromise,” Manaenko said. “When it looks like the conflict is almost solved, one of the two does something that takes it to yet another level, and the conflict deepens instead.”

Altimo also controls 6 percent of voting rights in VimpelCom that are owned by Ukrainian billionaire Viktor Pinchuk’s Bertofan Investments Ltd., Telenor’s Melgaard said.

‘Reduce the Risks’

Altimo will probably buy Bertofan’s 6 percent stake in VimpelCom, Anna Kurbatova, an analyst at OAO Gazprombank in Moscow, said by phone from Moscow yesterday. That would increase Altimo’s stake to 46.5 percent of voting rights in VimpelCom.

“That would reduce the risks of further escalation of the conflict and help achieve a balance of power between the two major shareholders,” Kurbatova said. “Russian authorities should be comfortable with such balance.”

Pinchuk’s EastOne Group, which says on its website that Bertofan Investments operates under the group’s mandate, did not return an e-mailed request for comment. The group had announced Bertofan’s purchase of the stake in VimpelCom in a Jan. 6 statement.

Moscow-based Altimo’s Vice President Evgeny Dumalkin declined to comment by e-mail. FAS spokeswoman Darya Silkova declined to comment when contacted by Bloomberg News by phone from Moscow.

Oil Near High

Oil, Russia’s biggest export earner, was little changed near a three-month high in New York yesterday amid concern that European leaders will fail to calm the region’s sovereign debt crisis and as the dollar slipped against the euro.

Crude oil for September delivery settled at $95.97 on the New York Mercantile Exchange yesterday. In intraday trading, the contract reached $96.53, the highest level since May 11. September oil expires today.

Brent oil for October settlement settled little changed at $113.70 on the London-based ICE Futures Europe exchange. Urals crude, Russia’s major export oil blend, fell 1.4 percent to $114.04 yesterday, falling for second time in five days.

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

To contact the editor responsible for this story: Tal Barak Harif at tbarak@bloomberg.net


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Companies Mentioned

  • VIP
    (VimpelCom Ltd)
    • $8.34 USD
    • 0.05
    • 0.6%
  • RSX
    (Market Vectors Russia ETF)
    • $24.61 USD
    • -0.42
    • -1.73%
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