Withdraws rating of Vimpel Communications OJSC
London, 22 June 2011 -- Moody's Investors Service has today assigned a Ba3 corporate family
rating (CFR) and probability of default rating (PDR) to VimpelCom Ltd,
simultaneously withdrawing the CFR and PDR of Vimpel Communications OJSC
("VimpelCom OJSC"), one of VimpelCom Ltd's key
operating entities. Concurrently, Moody's has assigned
a Ba3 issuer rating to VimpelCom OJSC; and a provisional (P)Ba3 senior
unsecured rating to the up to USD 2.5 billion proposed bond of
VimpelCom Holdings B.V., 100% owner of VimpelCom
OJSC, and fully owned by VimpelCom Ltd. via VimpelCom Amsterdam
BV. The outlook on the ratings is stable.
Moody's issues provisional ratings in advance of the final sale
of securities, and these ratings represent only the rating agency's
preliminary opinion. Upon a conclusive review of the transaction
and associated documentation, Moody's will endeavour to assign
definitive ratings to the bonds. A final rating may differ from
a provisional rating if the final documents and transaction structure
materially differ from the initially reviewed for the assignment of the
"Today's rating action reflects Moody's view that the
CFR of VimpelCom Ltd's key operating entity VimpelCom OJSC,
domiciled in Russia, should be repositioned at the level of its
ultimate parent," says Julia Pribytkova, a Moody's
Vice President -- Senior Analyst and lead analyst for VimpelCom
Moody's repositioning of the CFR was triggered by the evolution
of VimpelCom's group structure, with the Ukrainian company
Kyivstar being consolidated with VimpelCom in April 2010 at the level
of VimpelCom Ltd., and an M&A transaction in April 2011
resulting in VimpelCom Ltd consolidating Wind Telecomunicazioni S.p.A.
(Ba3, stable) and Orascom Telecom Holding S.A.E.
("OTH", B2 on review for upgrade), together referred
to below as "Wind Telecom".
Moody's Investors Service has withdrawn the credit rating of VimpelCom
OJSC for its own business reasons. Please refer to Moody's
Investors Service's Withdrawal Policy, which can be found
on our website, www.moodys.com.
Wind Telecomunicazioni will effectively remain fully ring-fenced
from VimpelCom Ltd. as its creditors have no recourse on VimpelCom
Ltd. Wind Telecomunicazioni S.p.A. has in
place mechanisms of restriction of all payments outside of the restricted
group until a leverage test is passed; the mechanisms are embedded
within the company's 2017 Senior Notes and 2017 PIK Notes which
can not be repaid before 2013. The Russian operating entity Vimpelcom
OJSC therefore remains the group's main source of financial flexibility
for servicing VimpelCom ltd.'s direct and guaranteed obligations,
and acts as guarantor for the new notes. The new notes are to be
issued at an interim holding level, VimpelCom Holdings B.V.,
and will be serviced with cash flow including in the form of dividends
upstreamed from VimpelCom OJSC and Kyivstar. In 2010, VimpelCom
OJSC paid out USD727 million in dividends. [The dividend policy
of VimpelCom Ltd.' envisages a payout of a significant part
of the annual operating free cash flow to its shareholders in the form
of dividends. Operating Free cash flow is defined as "Net
Cash from Operating Activities minus CapEx", and can be derived
from the consolidated group financial statements.
The new notes will rank pari passu with all other senior unsecured obligations
of the issuer and the guarantor (VimpelCom OJSC). The noteholders
will be protected through a cross-default clause affecting the
issuer and the guarantor including its significant subsidiaries,
and a negative pledge clause restricting creation of certain liens.
VimpelCom Ltd will primarily use the proceeds of the notes to repay the
currently outstanding USD2.2 billion drawn under the USD2.5
bridge facility, raised by the issuer's parent, VimpelCom
Amsterdam B.V., for Wind transaction financing purposes.
The principal methodology used in rating Vimpel-Communcations OJSC
was the Global Telecommunications Industry Methodology, published
Domiciled in the Netherlands, VimpelCom Ltd. is a holding
company for OJSC Vimpel Communications, Kyivstar, Wind Telecomunicazioni
S.p.A., and Orascom Telecom Holding S.A.E.,
with leading positions in Russia, Ukraine, Kazakhstan,
Italy, Algeria, Pakistan and operations in CIS countries,
South-East Asia and North America. In 2010, VimpelCom
Ltd. (then comprising VimpelCom OJSC and Kyivstar) generated approximately
USD10.5 billion in revenues and USD4.9 billion in reported
EBITDA. The company's pro-forma 2010 revenue post-combination
with Wind Telecom (completed on 15 April 2011) is estimated at USD21 billion.
Information sources used to prepare the credit rating are the following:
parties involved in the ratings, public information, and confidential
and proprietary Moody's Investors Service information.
Moody's Investors Service considers the quality of information available
on the issuer or obligation satisfactory for the purposes of maintaining
a credit rating.
The rating has been disclosed to the rated entity or its designated agents
and issued with no amendment resulting from that disclosure.
Moody's Investors Service may have provided Ancillary or Other Permissible
Service(s) to the rated entity or its related third parties within the
three years preceding the Credit Rating Action. Please see the
ratings disclosure page www.moodys.com/disclosures on our
website for further information.
Moody's adopts all necessary measures so that the information it uses
in assigning a credit rating is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see ratings tab on the issuer/entity page on Moodys.com
for the last rating action and the rating history.
The date on which some Credit Ratings were first released goes back to
a time before Moody's Investors Service's Credit Ratings were fully digitized
and accurate data may not be available. Consequently, Moody's
Investors Service provides a date that it believes is the most reliable
and accurate based on the information that is available to it.
Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see the Credit Policy page on Moodys.com for the methodologies
used in determining ratings, further information on the meaning
of each rating category and the definition of default and recovery.
Vice President - Senior Analyst
Corporate Finance Group
Moody's Investors Service Limited, Moscow Branch
Telephone: +7 495 228 6060
Facsimile: +7 495 228 6091
DIFC - Dubai
David G. Staples
MD - Corporate Finance
Corporate Finance Group
Moody's Investors Services Limited, Dubai Branch
Telephone: 00971 4237 9536
Moody's Investors Service Ltd.
Moody's assigns (P)Ba3 to VimpelCom Ltd. (Netherlands) and the group's proposed bond; Outlook Stable
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