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In April 2007, we entered into an agreement to sell a 33.3% ownership
interest in its wholly-owned subsidiary, Freevale Enterprises, Inc. (BVI)
for a sale price of US$20.0 million. Freevale Enterprises owns 21.0% of
Unitel. The sale effectively represents 7.0% of Unitel. The transaction
was finalized on June 14, 2007. In connection with this agreement,
the purchaser granted us an option to acquire the entire remaining
interest held by the purchaser and, simultaneously, we granted the
purchaser an option to sell to us the entire remaining interest held by
the purchaser.
On April 18, 2007, we acquired the remaining 10.0% of ArmenTel
that we did not already own from the Government of Armenia. The
purchase price of the additional 10.0% was US$55.9 million, which
constitutes approximately 1/9th of the final price paid by us for
the 90.0% of the shares of ArmenTel when we acquired ArmenTel
in November 2006. In addition, in the third quarter of 2007 we
paid a purchase price adjustment of approximately US$0.7 million
representing 10.0% of the undistributed net profit of ArmenTel for
the period from December 1, 2006 to March 31, 2007.
On August 13, 2007, we acquired Closed Joint Stock Company
«Corporation Severnaya Korona» or CSK, which holds GSM 900/1800
and D-AMPS licenses covering the Irkutsk Region. We acquired 100.0%
of the shares of CSK for approximately US$235.5 million. At the time
of its acquisition, CSK had approximately 571,000 subscribers.
Recent transactions
Golden Telecom. On December 21, 2007, two of our subsidiaries and
Golden Telecom, a leading provider of fixed-line telecommunications
and Internet services in major population centers throughout Russia
and other countries in the CIS, signed a definitive merger agreement
pursuant to which an indirect wholly-owned subsidiary of our
company commenced a tender offer on January 18, 2008, to acquire
100.0% of the outstanding shares of Golden Telecom’s common
ВымпелКом / Годовой отчет 2007
stock at a price of US$105.0 per share in cash. The initial tender
offer period and subsequent tender offer period closed on February
26, 2008 with 94.4% of the outstanding shares of Golden Telecom’s
common stock being tendered. On February 28, 2008, our indirect
wholly owned subsidiary was merged with and into Golden Telecom
and Golden Telecom became our indirect wholly owned subsidiary. The
total purchase price for 100.0% of the shares of Golden Telecom was
US$4,315.2 million. In connection with the merger, the outstanding
and unvested employee stock options and stock appreciation rights
relating to Golden Telecom’s common stock were converted into the
right to receive US$105.0 in cash less the exercise price relating to
such options and US$53.8 in cash less the exercise price relating to
such rights, respectively. The right to receive such payments continues
to vest in accordance with the original vesting schedules for such
options and rights respectively.
Vietnam. In September 2007, we signed a principal agreement with
the Ministry of Public Security of Vietnam and The Millennium
Global Solutions Group, Inc., a U.S. company, that contemplates
the establishment of a mobile telecommunications joint venture
in Vietnam. The establishment of the joint venture, including the
shareholder structure, terms and amounts of investment and corporate
governance remain subject to negotiation and execution of final joint
venture documents, receipt of regulatory approvals, and corporate
approvals of the parties. We have continued negotiations and expect
that the terms of the joint venture agreement, if concluded, will differ
from the terms contemplated by the principal agreement.
Future liquidity and capital requirements
Telecommunications service providers require significant amounts
of capital to construct networks and attract subscribers. In the
foreseeable future, our further expansion will require significant
investment activity, including the acquisition of equipment and
possibly the acquisition of other companies.
Payments due by period
Contractual Obligations (2) Total Less than 1 year 1-3 years 3-5 years More than 5 years
(in millions of U.S. dollars) (1)
Long-term debt
(including loans from UBS (Luxembourg) S.A.
(funded by the issuance of loan participation
notes by UBS (Luxembourg) S.A.) 3,566.3 666.1 1,621.8 505.1 773.3
Equipment financing 260.5 87.6 105.7 47.2 20.0
Capital lease obligations 13.3 4.1 8.5 0.7 –
Non-cancelable lease obligations 58.6 23.6 29.2 5.5 0.2
Purchase obligations (3) 479.7 362.0 112.4 5.1 0.3
Other long-term liabilities 168.9 149.4 19.5 – –
Total 4,547.4 1,292.8 1,897.3 563.7 793.7
(1) Amounts include interest.
(2) Debt payments could be accelerated upon violation of debt covenants.
(3) Purchase obligations primarily include our material contractual legal obligations for the future purchase of equipment and services.
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