VimpelCom Ltd (ADR) (NASDAQ:VIP) is getting taken to the woodshed Friday on intense volume (22 times its average!) after pricing a secondary offering of VIP stock.
VimpelCom will offer up 142.5 million shares (American depositary shares) from shareholder Telenor East for $3.50 a pop. This is after VIP stock soared 9% to close at $3.63 a share on Thursday.
Underwriters for the offering include Credit Suisse, Morgan Stanley and JPMorgan. Telenor has also agreed to a 30-day option for the underwriters to purchase as many as 21.38 million additional VIP shares. The offering is expected to close next Wednesday.
VimpelCom is not entitled to proceeds from the sale. And as noted in the press release, the sale of VIP stock won’t dilute outstanding shares.
According to Otkritie Capital analyst Alexander Vengranovich, who spoke to Bloomberg:
“The awaited sale will help boost VimpelCom’s free float and increase its market value in the long term. The entire stake is too large for the market to digest, so Telenor opted to sell part of it now and most of the rest later through the convertible bonds.”
What You Need to Know About VIP Stock
Telenor’s sale is part of a plan to reduce its stake in VIP stock by about 33%, aiding its expansion into emerging Asian markets. However, the main catalysts for the sale were accusations of bribery against VimpelCom. The company, along with two others, was believed to have bribed its way into an investment opportunity in Uzbekistan.
VimpelCom, for those unfamiliar, is a wireless telecom based in the Netherlands. It’s the region’s largest telecom, with operations in countries such as Russia, Algeria, Zimbabwe and Laos. And it is owned in part by Russian billionaire Mikhail Fridman.
Services include messaging, voice and even media and content delivery. It also holds several brands: Beeline, for internet solutions; Wind, a pure voice and data service; Kyivstar, the Ukraine’s largest mobile phone presence; and many others.
The company intends to get into online video, as it recently partnered with Okko, one of Russia’s more prominent video services.
As of this writing, John Kilhefner did not hold a position in any of the aforementioned securities.
