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VimpelCom challenged the tax inspectorate’s final decision and
as of December 31, 2007, VimpelCom received positive court rulings that
invalidated a portion of the tax inspectorate’s final decision for the
total amount of 733 million Russian roubles in income tax and other
taxes (including 195 million Russian roubles in fines and penalties),
which is approximately US$29,862 (including approximately US$7,944
in fines and penalties) at the exchange rate as of December 31, 2007.
VimpelCom lost the portion of its claim related to the write off of doubtful
debts for the total amount of 192 million Russian roubles in income tax
(including 27 million Russian roubles in fines and penalties), which is
approximately US$7,822 (including approximately US$1,100 in fines and
penalties) at the exchange rate as of December 31, 2007. The Company
fully reserved this amount in 2006.
VimpelCom continues to challenge all other issues of the tax inspectorate’s
decision in court.
Following the provisions of FIN 48 (Note 12) VimpelCom has unrecognized
tax benefits related to the tax inspectorate’s claim of US$19,362
recorded in the accompanying financial statements that may be reversed
depending on the outcome of the remaining litigation relating to the tax
inspectorate’s decision.
KaR-Tel
On January 10, 2005, KaR-Tel received an «order to pay» issued by the
Savings Deposit Insurance Fund (the «Fund»), a Turkish state agency,
in the amount of approximately US$5.5 billion (stated as approximately
Turkish Lira 7.55 quadrillion and issued prior to the introduction of the
New Turkish Lira, which became effective as of January 1, 2005). The
order to pay, dated as of October 7, 2004, was delivered to KaR-Tel by
the Bostandykski Regional Court of Almaty. VimpelCom believes that the
order to pay is without merit, in part due to the fact that the former
shareholders have not owned any interest in KaR-Tel since November
2003, when their interests were redeemed in accordance with a decision
of the Review Panel of the Supreme Court of Kazakhstan, and that any
attempted enforcement of the order to pay in relevant jurisdictions
outside of Turkey is subject to procedural and substantive hurdles.
However, there can be no assurance that KaR-Tel will prevail in its
petition for the cancellation of the order to pay (either on substantive or
procedural grounds), that claims targeting VimpelCom’s ownership of KaR-
Tel will not be brought by the Fund directly against VimpelCom or its other
subsidiaries or that KaR-Tel and/or VimpelCom or its other subsidiaries will
not be required to pay amounts claimed to be owed in connection with the
order or on the basis of other claims made by the Fund.
The adverse resolution of this matter, and any other matters that may arise
in connection therewith, could have an adverse effect on VimpelCom’s
business, financial condition and results of operations. The «order to pay»
amount is not reflected as a liability in KaR-Tel’s balance sheet as of the
date of acquisition, and management is unable to estimate the effect that
any ultimate resolution of these matters might have on its consolidated
financial statements.
19. SUBSEQUENT EVENTS
ВымпелКом / Годовой отчет 2007
On December 21, 2007, subsidiaries of VimpelCom and Golden Telecom,
a leading facilities-based provider of integrated telecommunications
and Internet services in the Russian Federation, signed a definitive
merger agreement. Pursuant to the merger agreement, Lillian
Acquisition («Lillian»), an indirect wholly owned subsidiary
of VimpelCom, commenced a tender on January 18, 2008, to acquire
100% of the outstanding shares of Golden Telecom’s common stock
at a price of $105 per share in cash, implying a total equity value
of approximately US$4,344,000. The accompanying financial statements
include US$200,170 of cash deposited in escrow in accordance with the
acquisition agreement. The tender offer was successfully completed
on February 15, 2008, with 36,533,255 shares of Golden Telecom common
stock (including shares delivered through notices of guaranteed
delivery), representing approximately 90.5% of the outstanding shares
of Golden Telecom’s common stock tendered and not withdrawn.
On February 18, 2008, commenced a subsequent offer for all remaining
shares of Golden Telecom common stock. The subsequent offer was
successfully completed on February 26, 2008, with 38,093,677 shares
of Golden Telecom common stock tendered during the initial and
subsequent offering periods. These shares represented approximately
94.4% of the outstanding shares of Golden Telecom’s common stock,
an amount sufficient to permit the completion of a «short-form» merger
under applicable Delaware law, without a vote of the stockholders
of Golden Telecom. As a result, VimpelCom Finance B.V., a direct
wholly-owned subsidiary of VimpelCom, and Lillian on February 28, 2008,
consummated a «short-form» merger, in which Lillian was merged with
and into Golden Telecom and all remaining stockholders of Golden Telecom
who did not tender their shares in the tender offer (other than those,
if any, properly perfecting dissenters’ rights) received the right to receive
$105.00 per share in cash. Upon completion of the merger Golden Telecom
became an indirect wholly-owned subsidiary of VimpelCom.
On February 8, 2008 VimpelCom entered into a new loan agreement for an
aggregate principal amount of US$3,500,000. ABN AMRO Bank, Barclays
Capital, BNP Paribas, CALYON, HSBC Bank, ING Bank, UBS Limited have
jointly committed to provide a US$1,500,000 bridge term loan facility
(«Facility A») and a US$2,000,000 term loan facility («Facility B»)
to partially finance the acquisition of Golden Telecom by the subsidiaries
of the Company. Facility A is required to be refinanced within
12 months by an issuance of bonds or other form of financing, subject
to market conditions. Facility B is required to be repaid in equal semiannual
installments starting from the date falling 12 months after
the signing date. Facility A bears interest at LIBOR plus margin 0.75%
per annum for first 6 month; 1% for the period from 7 to 9 months;
and 1.25% thereafter. Facility B bears interest at LIBOR plus margin 1.5%
per annum. On 19, February 2008, VimpelCom drew down US$3,500,000
under the loan agreement.
On 13 February 2008 VimpelCom advanced to Crowell, under a loan
agreement of February 11, 2008, (the «Loan Agreement»), a loan
in the principal amount of US$350,000 for a term of 18 months and at the
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