Telenor Starts Public Sale of $556 Million VimpelCom Stake

(Bloomberg) -- VimpelCom Ltd fell the most in more than seven months in New York after co-owner Telenor ASA said it started reducing its 33 percent stake in the emerging-markets carrier through a public offering of about $556 million of American depository shares.

Telenor will sell about 142.5 million shares, or about 8.1 percent of VimpelCom, the Oslo-based company said in a statement on Monday. Telenor has granted underwriters an option to purchase as many as 21.4 million additional VimpelCom shares, it said. The Nordic region’s biggest phone company may also offer as much as $1 billion in 3-year bonds exchangeable into VimpelCom stock.

The proceeds will help fund the company’s plans to expand in emerging markets in Asia, such as Vietnam and Indonesia. Telenor flagged the sale last year after VimpelCom became embroiled in bribery accusations related to its Uzbek unit. The scandal cost $795 million to settle for VimpelCom and Telenor executives, including Chief Financial Officer Richard Olav Aa and General Counsel Paal Wien Espen, resigned.

“The awaited sale will help boost VimpelCom’s free float and increase its market value in the long term,” Alexander Vengranovich, an analyst at Otkritie Capital, said by phone. “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.”

VimpelCom shares closed at $3.90 in U.S. trading on Friday, valuing the stake at $556 million. The stock traded down 6.2 percent at 9:38 a.m. in New York Monday after sliding as much as 8.5 percent, the most since Jan. 15. The price at which the shares will be sold hasn’t been set yet. Telenor is VimpelCom’s second-largest shareholder after LetterOne Holdings SA, which owns a 48 percent stake.

VimpelCom would welcome a sale of its stock by Telenor as it would increase the number of shares available for public trading, Chief Executive Officer Jean-Yves Charlier said in August.

Morgan Stanley and JPMorgan Chase & Co. will act as joint global coordinators and joint lead bookrunners for Monday’s offering, and Citigroup Inc. and Credit Suisse Group AG will act as joint bookrunners.

To contact the reporters on this story: Stephen Treloar in Oslo at streloar1@bloomberg.net, Ilya Khrennikov in Moscow at ikhrennikov@bloomberg.net. To contact the editors responsible for this story: Veronica Ek at vek@bloomberg.net, Kim Robert McLaughlin, Jonas Bergman