Beeline AR 2005 - VimpelCom

108 VimpelCom
Annual Report 2005
26. Subsequent Events
On January 18, 2006, VimpelCom acquired 100% of Bakarie Uzbekistan Telecom LLC
(“Buztel”) for the purchase price of US$60,000 plus the assumption of
approximately US$2,400 in debt. Buztel holds national GSM-900 and -1800 licenses.
On February 9, 2006, VimpelCom acquired UNITEL LLC (“Unitel”) for the purchase
price of US$200,000 plus assumption of approximately US$7,700 in debt, based on
VimpelCom’s assessment at the time of closing of the acquisition. Unitel holds
national GSM-900 and -1800 licenses. At the time of the acquisition, Unitel served
approximately 364,000 subscribers, representing, according to the company’s
estimates, a 31% market share in Uzbekistan. In addition, recognizing the benefits
of local expertise when entering a new country, VimpelCom intends to find an
Uzbek partner to whom to sell a minority interest in the planned combined
company.
Buztel was previously owned by an affiliate of Alfa Telecom Limited, also known as
Altimo, a leading Moscow-based telecom investment company and member of the
Alfa Group of companies, which currently indirectly holds 32.9% of the voting
shares of VimpelCom. The transaction was completed on February 9, 2006.
Telenor’s lawsuits
On January 26, 2006 “Telenor East Invest AS” filed two lawsuits in the Moscow City
Arbitration Court.
The its first claim Telenor is asking the court to declare invalid the decision of the
extraordinary general shareholders’ meeting of VimpelCom (“EGSM”) approving the
acquisition of URS as an interested party transaction. Telenor claims that EGSM
was convened in violation of law and the decision taken by EGSM violates its rights
and legitimate interests. The preliminary hearing was held on 26 February 2006.
Notes to Consolidated Financial Statements
The main hearing took place on April 7, 2006. After the parties have presented
their arguments to the court, the court has postponed the main hearing until May
15, 2006. The court has asked the parties to collect and present additional
documents supporting their arguments.
The its second claim Telenor is asking the court to declare invalid the decision of
VimpelCom’s General Director relating to VimpelCom’s acquisition of URS. On
February 1, 2006, the Moscow City Arbitration Court rendered a decision to
schedule a preliminary court hearing on March 1, 2006. On March 1, 2006 the
Moscow City Arbitration Court rendered a decision to postpone the preliminary
court hearing until April 5, 2006. The main hearing took place on April 5, 2006.
After the parties have presented their arguments to the court, the court has
postponed the main hearing until May 25, 2006, based on Telenor’s statement,
asking to postpone the hearing in order for Telenor to review the response to the
claim filed by VimpelCom.
On January 31, 2006 “Telenor East Invest AS” filed a lawsuit in the Moscow City
Arbitration Court in order to declare invalid the acquisition of URS and to unwind
the acquisition. The Moscow City Arbitration Court rendered a decision to schedule
a preliminary court hearing on August 1, 2006.
There can be no assurance that VimpelCom will prevail at any stage of the
litigation relating to these lawsuits or that other claims by Telenor East Invest AS
or other third parties regarding VimpelCom's acquisition of URS or other matters
will not be made. In the event a decision unfavorable to VimpelCom becomes
binding, including a decision to unwind the URS acquisition, it could have an
adverse effect on VimpelCom, its business, its expansion strategy and its financial
results. Management cannot make an estimate of the effect of the ultimate
resolution of the matters described above on VimpelCom’s consolidated financial
statements.