Russian operator VimpelCom Ltd and Weather Investments, the investment vehicle of Egyptian businessman Naguib Sawiris, have announced a merger that will create the fifth largest mobile operator in world in user numbers.
In merging with Weather,…
Russian operator VimpelCom Ltd and Weather Investments, the investment vehicle of Egyptian businessman Naguib Sawiris, have announced a merger that will create the fifth largest mobile operator in world in user numbers.
In merging with Weather, VimpelCom Ltd will own 51.7% of Orascom Telecom and 100% of Wind, Italy’s third mobile operator. The new entity will have 174 million subscribers over 20 countries in Europe, Asia, Africa and North America.
Under the deal, Weather’s shareholders will receive 325,639,827 new VimpelCom common shares, representing 20% economic interest and 18.5% voting interest in the group, and US$1.8bn in cash to be financed from cash balances and new debt facilities. The transaction will also lead to the refinancing of some debt. The companies said that the total debt to be raised after taking account of waivers of existing debt is expected to be around US$2bn to US$2.5bn, bringing the post transaction net debt up to US$24bn.
Once the deal is finalised, Telenor will hold 31.7% of economic interest and 29.3% of voting rights, while Altimo will hold 31.4% and 36.4% respectively. VimpelCom minority shareholders will represent 17% of the economic rights and 15.7% of the voting rights.
Based on 2009 pro forma revenues, VimpelCom said that the existing operations in Russia would represent 35% of the combined company and Wind Italy 34%. Its pro forma net operating revenues stands at US$21.5bn, its EBITDA at US$9.5bn with an EBITDA margin of about 44% for 2009.
Orascom’s 34.7% stake in the Egyptian Company for Mobile Services (ECMS) and 75% stake in Korvolink in North Korea will be demerged and remain in the hands of Weather’s shareholders. Similarly, the Wind assets to be demerged include the Libero internet portal, Wind International Services wholesale carrier subsidiary and the operation of a sub-sea cable between Italy and Greece.
The transaction is expected to close in Q1 2011 and the demergers should be done by Q3 2011.
VimpelCom is advised by UBS, Deutsche Bank and Akin Gump Strauss Hauer & Feld, while Weather is advised by Lazard, EFG-Hermes, Credit Suisse and Cleary Gottlieb Steen & Hamilton. Citigroup was financial adviser and provided a fairness opinion to the supervisory board of VimpelCom.
Weather will choose two members of the eleven-member board of VimpelCom, while Telenor and Altimo will continue to appoint three members each with another three to be independent.
