Do You Know What VimpelCom Ltd (ADR) (NASDAQ:VIP)’s Major Shareholder Is Doing?


VimpelCom Ltd (ADR) (NASDAQ:VIP)’s major shareholder, Telenor, has announced plans to significantly reduce its equity stake in VIP. Telenor owns 33% of stake in VimpelCom and will eventually offload all of that stake, though initially it has only kicked off a process of selling a portion of it.

Selling $555 million worth of shares

In the initial phase of getting rid of VimpelCom shares, Telenor will sell millions of shares equivalent to 8.1% equity stake in VimpelCom. The sale is expected to yield $555 million for the company.

Later, Telenor plans to issue bonds worth about $1 billion. Holders of the bonds will have the option to exchange them for VimpelCom shares after a period of three year.

Exiting investment in VimpelCom

It was in October 2015 that Telenor hinted at plans to exit investment in VimpelCom Ltd (ADR) (NASDAQ:VIP), but it seemed to be struggling to find a buyer. Now the company has kicked off the process of leaving VIP, though the exit process will be gradual because of massive amount of shares that it has to sell.

VimpelCom Ltd (ADR) (NASDAQ:VIP) – What’s on offer ?

In the secondary public offer, Telenor is selling 142.5 million VimpelCom shares and it has granted the underwriters the option to purchase additional 21.38 million shares to cover overallotment.

Morgan Stanley (NYSE:MS), JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc (NYSE:C) and Credit Suisse are helping Telenor with the public offering of its equity stake in VimpelCom. When the sale is completed, Telenor’s stake in VimpelCom will drop to nearly a quarter.

What’s the money for?

Telenor intends to use the proceeds from the sale of stake in VimpelCom to fund expansion into emerging markets such as Indonesia and Vietnam.

Telenor’s relationship with VimpelCom Ltd (ADR) (NASDAQ:VIP) has been strained in the recent times over a bribety scandal that ended up costing VimpelCom $795 million in settlements in the U.S. and Dutch.

Though it might seem that Telenor’s exit is a vote of no confidence in VimpelCom, the leadership of VimpelCom actually believes that the move will increase the number of the company’s shares available to public traders.


1 Comment

  1. That isn’t the real reason for the Telenor disenchantment. A few years ago the executives presented a totally absurd acquisition which Telenor reps on the board did a piss poor job IMHO evaluating and bought billions of middle east assets from a billionaire just before the Arab spring. I don’t think anyone got fired but it cost VIP about $15/share of value. Once this overhang is gone I believe VIP will return to profitability but a really big Shame on You should be sent to Telenor for having people on the board who didn’t question management sufficiently IMHO.

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