Moscow and New York (January 29, 1999) - Open Joint Stock Company "Vimpel-Communications" ("VimpelCom" or the "Company") (NYSE: VIP) today announced that at an extraordinary general meeting of VimpelCom's shareholders held this morning in Moscow, 97% of the shares voted approved the issuance of 8,902,201 newly-issued shares of VimpelCom's Common Stock to Telenor East Invest AS ("Telenor"). In addition, VimpelCom's shareholders approved all other items on the agenda, including certain amendments to the Company's Charter, and elected a new board of directors consisting of nine individuals (including three Telenor designees). Each of such decisions were approved by between 94% and 99% of the shares voted. Subject to obtaining the necessary regulatory approvals and satisfaction of certain other conditions precedent to closing, the Company anticipates the Telenor transaction will close by June 1, 1999.
As announced on December 1, 1998, Telenor will acquire 25.7% of VimpelCom's total voting stock (31.6% of the total Common Stock) in consideration for a cash payment of approximately US$162 million, the full amount of which has been placed in escrow to fund the purchase of shares. This capital infusion will be used by VimpelCom to build out the Company's Moscow GSM licenses and fiber optic network, pay certain license fees, make opportunistic acquisitions, develop an Internet business and begin the evolutionary development of the Company's regional GSM licenses. The Company will issue 8,902,201 new shares of Common Stock at US$18.19 per share (US$13.64 per ADS).
On January 20, 1999, Telenor AS (the parent company of Telenor) and Telia, the leading telecommunications company in Sweden, signed a letter of intent to merge into a new company which will be registered in Sweden. When merged, the Swedish government will own 60% of the new company, while the Norwegian government will own 40%. The balance between the owners will be preserved by giving the parties equal voting rights, thereby ensuring equal influence. Upon the merger of Telenor and Telia, an initial public offering of the new company is expected after which Telenor and Telia will each retain a 33.4% interest. The new company's first chairman of the board of directors will be Mr. Jan Stenberg, currently chairman of the board of directors of Telia, while Mr. Tormod Hermansen, currently President and CEO of Telenor AS, will be the President and CEO of the new company. The new company will become one of the leading telecommunications groups in Northern Europe with annual revenues of approximately US$10 billion.
Commenting on today's announcement, Dmitri Zimin, VimpelCom's President and Chief Executive Officer said: "We are delighted that our shareholders have approved this very important alliance for our Company. The combined expertise will give VimpelCom the competitive advantage necessary to maintain its position as a leading telecommunications group in Russia and the CIS. Additionally, the infusion of capital into the Company at this time will strengthen our competitive position and will allow us to move faster to market with a number of new projects."
Telenor is a provider of fixed, mobile, satellite and Internet services and is headquartered in Oslo, Norway. Telenor operates GSM mobile networks in Norway, Germany, Ireland, Greece, Austria, Hungary, Montenegro, Russia, Ukraine and Bangladesh. The current Telenor mobile subscriber base in Norway numbers 1.5 million, a 75% market share in one of the world's most heavily penetrated mobile markets, where the penetration rate is approximately 43%. Telenor's satellite based telephony operations are amongst the largest in the world. Telenor is co-owner of the INTBLSAT, EUTELSAT AND INMARSAT satellite organizations. Telenor is the largest distributor of TV programs to the Scandinavian market.
VimpelCom is a leading provider of cellular telecommunications in Russia, marketing its services under the brand name "Bee Line". The VimpelCom Group operates GSM and Digital-AMPS cellular networks in the Moscow License Area, which includes the City of Moscow and the Moscow Region. The VimpelCom Group holds various cellular licenses covering a total population of approximately 100 million (68% of Russia's population). VimpelCom was the first Russian company listed on the New York Stock Exchange (November 1996), and its ADSs trade under the symbol "VIP".
This press release contains forward-looking statements related to the development of the Company's business. These statements are based on Management's best assessment of future market conditions and trends. The actual outcome may differ from these statements as a result of unforeseen developments from competition, governmental regulations of the wireless telecommunications industry, general political uncertainties in Russia and general economic developments in Russia, all of which may be aggravated by the current economic and political crisis. No assurance can be given that the economic crisis will abate in the foreseeable future or that the full impact of the economic crisis on the VimpelCom Group can be assessed at this time. As a result of such uncertainties, there can be no assurance that current or future changes in the political, economic and social environment or current or future regulation of the Russian telecommunications industry will not have a material adverse effect on the VimpelCom Group. VimpelCom disclaims any obligation to update developments of these risk factors or to announce publicly any revision to any of the forward-looking statements contained in this release, or to make corrections to reflect future events or developments.
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