Shareholders War Turns in Favor of VimpelCom
Alfa Group has increased its holdings in the VimpelCom cellular provider by 2.9 percent, that is, to 35.8 percent, though its telecommunications management company Altimo. Altimo's share in the common stock rose from 24.5 to 27.7 percent. Norwegian co-owner Telenor immediately accused the group of insider trading. The shareholders' conflict has led to a dramatic increase in VimpelCom's capitalization: 70 percent in the past four months.
Altimo's action became known yesterday from papers filed with the U.S. Securities and Exchange Commission. Jam Holding Asset Management, a subsidiary of the Deutsche UFG investment bank acquired the stock for Altimo. A wholly-owned subsidiary of Altimo concluded a swap agreement with Jam on August 30. At that time, Altimo stated that it did not intend to buy a controlling package in VimpelCom, but looked upon the stock as a financial instrument. More than 35 percent of the company's stock is now in circulation on the free market.
Telenor made similar statements when it concluded a swap agreement with ING Bank, which was announced on June 7 of this year. Under that agreement, ING Bank will obtain 3.96 percent of the stock in VimpelCom by June 2, 2007, which Telenor may then purchase.
Those actions had a marked effect on the company's capitalization. At the end of May VimpelCom ADRs cost $37.50 on the NYSE. Last week, they reached a historic high of $63.51. That is 70 percent growth in four months, and the company's value rose to $12.6 billion. Analysts note that, besides the stock buy-up, news from the company itself contributed to its growth. “The fact that Alexander Izosimov remained director of the company is positive information for investors because it indicates that the shareholders' conflict is not influencing the company,” explained IK Prospect analyst Oleg Salmanov. “The news that Alfa has agreed to separate with Telenor and is ready to exchange assets also played a positive role.”
“Alfa Group made its agreement with Jam Holding on August 30, two days before VimpelCom announced the results from the second quarter,” Telenor vice president Dag Melgard noted, hinting that the company took advantage of it early knowledge of those results. “All agreements were made and announced in strict compliance with U.S. securities law,” Altimo vice president Kirill Babaev countered. “All acquisitions were made after the publications of the quarterly results.”
Ivan Cheberko, Vitaly Gaidaev
All the Article in Russian as of Oct. 11, 2006
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