Russia's VimpelCom unit to hit bond market with business combination

By Jennifer Chiou

New York, Jan. 18 - VimpelCom Ltd.'s supervisory board gave its final approval of the proposed combination of VimpelCom and Wind Telecom SpA (formerly Weather Investments SpA), and the company will partially finance the transaction in the bond market, according to a 6-K filing with the Securities and Exchange Commission.

After the initial announcement on Oct. 4, VimpelCom and Wind Telecom launched the required financing processes for the transaction, with VimpelCom obtaining commitments of up to $6.5 billion from Russian and international banks.

Of this amount, the 8-K noted that VimpelCom expects to draw down about $5 billion to finance the cash portion of the consideration and to refinance Orascom Telecom Holding SAE debt to be due upon the acquisition by VimpelCom.

Half will be raised in the form of a ruble term loan and the balance via a dollar bridge loan to be refinanced in the bond markets, VimpelCom added.

According to the filing, Wind Italy refinanced a total of $8.5 billion in November and obtained necessary waivers from its high-yield and PIK noteholders.

The gross debt and net debt of the combined company as of the end of the third quarter of 2010 were $24.8 billion and $21.1 billion, respectively.

New sources of the company's main financing structure elements include bridge loans and term loans in addition to bonds.

The filing also stated that six of nine directors, including all three independent directors and the three Altimo-nominated directors, voted in favor of the combination. Three Telenor-nominated directors voted against the transaction.

Following completion, VimpelCom will own, through Wind Telecom, 51.7% of Orascom and 100% of Wind Telecomunicazioni SpA.

VimpelCom is a Moscow-based telecommunications provider.

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